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Option Grant Agreement

Option Grant Agreement Template for Indonesia

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Key Requirements PROMPT example:

Option Grant Agreement

"I need an Option Grant Agreement under Indonesian law for our new Chief Technology Officer, granting 50,000 stock options with a 4-year vesting period starting March 1, 2025, with standard termination provisions and a one-year cliff."

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Document background
The Option Grant Agreement is a crucial document used in Indonesian corporate practice when companies wish to provide equity incentives to their employees, directors, or consultants. It forms part of the company's equity compensation strategy and must be structured in compliance with Indonesian Company Law, capital market regulations, and employment laws. The agreement typically follows any established Employee Stock Option Plan (ESOP) and requires proper corporate approvals under Indonesian law. It becomes particularly important in sectors with high competition for talent, where equity compensation is used as a retention tool. The document must address specific Indonesian legal requirements including notarization requirements for certain corporate actions, spousal consent under marital property laws, and compliance with foreign investment restrictions if applicable.
Suggested Sections

1. Parties: Identification of the company granting the options and the option recipient

2. Background: Context of the option grant, relationship between parties, and reference to any relevant employee stock option plan

3. Definitions: Definitions of key terms used throughout the agreement

4. Grant of Option: Details of the option grant including number of shares, type of shares, and exercise price

5. Vesting Schedule: Timeline and conditions for when options become exercisable

6. Exercise Period: Time period during which vested options may be exercised

7. Method of Exercise: Procedures and requirements for exercising options

8. Payment and Taxation: Terms regarding payment of exercise price and tax obligations

9. Restrictions on Transfer: Limitations on transfer or assignment of options

10. Termination Provisions: Treatment of options upon various termination scenarios

11. Compliance with Laws: Provisions ensuring compliance with Indonesian securities and corporate laws

12. Notices: Requirements for formal communications between parties

13. Governing Law: Specification of Indonesian law as governing law

14. Execution: Signature blocks and execution requirements

Optional Sections

1. Performance Conditions: Additional vesting conditions tied to performance metrics - used when options are performance-based

2. Change of Control: Provisions dealing with corporate transactions - particularly important for private companies

3. Lock-up Period: Restrictions on sale of shares after exercise - typically for public companies

4. Shareholders' Agreement Adherence: Requirement to join existing shareholders' agreement - used for private companies

5. Non-Competition and Confidentiality: Additional restrictive covenants - used when not covered in separate employment agreement

6. Foreign Exchange Compliance: Additional provisions for foreign grantees regarding currency exchange and repatriation

7. Market Standoff Agreement: Restrictions during public offering - used for pre-IPO companies

Suggested Schedules

1. Notice of Exercise Form: Standard form for exercising options

2. Vesting Schedule Details: Detailed breakdown of vesting dates and quantities

3. Copy of ESOP Plan: Full copy or relevant excerpts of the employee stock option plan

4. Tax Declaration Form: Required tax forms and declarations under Indonesian law

5. Spousal Consent Form: Consent form for married grantees under Indonesian marital property law

6. Board/Shareholder Resolution: Copy of corporate approvals for the option grant

7. Fair Market Value Calculation: Methodology and calculation of share price for private companies

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Board
Cause
Change of Control
Company
Confidential Information
Consultant
Disability
Effective Date
Employee
Exercise Notice
Exercise Period
Exercise Price
Fair Market Value
Grant Date
Good Leaver
Bad Leaver
Grantee
Initial Public Offering
Notice
Option
Option Shares
OJK
Plan
Plan Administrator
Restricted Period
Securities Laws
Service Provider
Share Capital
Shareholders Agreement
Shares
Subsidiary
Tax
Term
Termination Date
Termination of Employment
Transfer
Vesting Commencement Date
Vesting Schedule
Vest
Vested Option
Unvested Option
Working Days
Relevant Industries

Technology

Financial Services

E-commerce

Manufacturing

Professional Services

Healthcare

Education

Telecommunications

Consumer Goods

Real Estate

Energy

Mining

Retail

Media and Entertainment

Relevant Teams

Legal

Human Resources

Finance

Corporate Secretariat

Executive Leadership

Compensation and Benefits

Compliance

Corporate Governance

Treasury

Tax

Relevant Roles

Chief Executive Officer

Human Resources Director

Chief Financial Officer

Legal Counsel

Corporate Secretary

Compensation Manager

Board Member

Department Head

Senior Manager

Employee Stock Plan Administrator

Vice President

General Manager

Chief Technology Officer

Chief Operating Officer

Senior Executive

Managing Director

Industries
Law No. 40 of 2007 on Limited Liability Companies: The main company law in Indonesia that governs corporate matters including share issuance and corporate governance requirements for option grants
Law No. 8 of 1995 on Capital Markets: Regulates securities transactions and requirements for public offerings, including provisions related to stock options
OJK Regulation No. 32/POJK.04/2015: Financial Services Authority regulation on capital increases in public companies, including provisions for employee stock option programs
Law No. 13 of 2003 on Employment: Provides framework for employment relationships and compensation, relevant when options are granted as part of employment packages
Income Tax Law (Law No. 36 of 2008): Governs taxation of benefits received from employment, including treatment of stock options when granted and exercised
Law No. 25 of 2007 on Investment: Regulates foreign investment aspects, important when options are granted to foreign employees or involve foreign ownership
Minister of Finance Regulation No. 11/PMK.03/2016: Specific regulations on the tax treatment of employee stock options, including timing of taxation and valuation methods
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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