Startup Employee Equity Agreement Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that establishes the terms and conditions under which a startup company grants equity ownership to its employees. The document complies with Indonesian Company Law (Law No. 40 of 2007) and Employment Law (Law No. 13 of 2003), addressing crucial aspects such as vesting schedules, exercise conditions, transfer restrictions, and tax implications. It includes specific provisions for regulatory compliance with Indonesian investment laws and considers local corporate governance requirements, making it suitable for both domestic and foreign-owned startups operating in Indonesia.

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What is a Startup Employee Equity Agreement?

The Startup Employee Equity Agreement is a crucial document for Indonesian startups looking to attract and retain talented employees through equity-based compensation. It is typically used when a company wants to offer shares or stock options as part of an employee's compensation package, aligning the interests of employees with the company's long-term success. The agreement must comply with Indonesian regulatory requirements, including the Company Law (Law No. 40 of 2007), Employment Law, and relevant tax regulations. It becomes particularly important during funding rounds, potential exits, or when establishing employee stock option pools. The document includes detailed provisions for vesting schedules, exercise prices, transfer restrictions, and regulatory compliance, making it suitable for both Indonesian startups and foreign-owned startups operating in Indonesia. This agreement is essential for creating transparent and legally compliant equity arrangements while protecting both the company's and employees' interests.

What sections should be included in a Startup Employee Equity Agreement?

1. Parties: Identifies the company and the employee receiving equity

2. Background: Sets out the context of the agreement and the company's equity incentive program

3. Definitions: Defines key terms used throughout the agreement

4. Grant of Equity: Details the type and amount of equity being granted

5. Vesting Schedule: Specifies the vesting period, cliff period, and vesting conditions

6. Exercise Price and Payment: States the price per share and payment terms if applicable

7. Taxation and Compliance: Addresses tax obligations and regulatory compliance requirements

8. Restrictions on Transfer: Sets out limitations on selling or transferring the shares

9. Company's Right of First Refusal: Company's right to repurchase shares before sale to third parties

10. Termination Provisions: Effects of employment termination on vested and unvested shares

11. Representations and Warranties: Standard declarations by both parties

12. Confidentiality: Obligations to keep agreement terms confidential

13. Governing Law and Jurisdiction: Specifies Indonesian law as governing law and jurisdiction

14. General Provisions: Standard boilerplate clauses including amendments, notices, etc.

What sections are optional to include in a Startup Employee Equity Agreement?

1. Tag-Along Rights: Optional protection allowing employee to join in sale of shares by founders - typically included for senior employees

2. Drag-Along Rights: Company's right to force employee to sell shares in case of company sale - included if significant equity is granted

3. Board Approval Process: Required for grants above certain thresholds or to senior management

4. International Employee Provisions: Special provisions for non-Indonesian employees regarding foreign ownership restrictions

5. Lock-up Period: Additional holding period restrictions - typically for pre-IPO companies

6. Bad Leaver Provisions: Specific consequences for termination due to misconduct - included for senior positions

7. Voting Rights: Specific voting arrangements if shares carry voting rights - typically for senior management

What schedules should be included in a Startup Employee Equity Agreement?

1. Schedule 1: Details of Equity Grant: Specific details of shares/options granted, including number, class, and nominal value

2. Schedule 2: Vesting Schedule: Detailed breakdown of vesting dates and percentages

3. Schedule 3: Shareholders Agreement Deed of Adherence: Form of deed binding employee to existing shareholders agreement

4. Schedule 4: Share Exercise Notice: Template form for exercising options

5. Schedule 5: Company's Articles of Association Excerpts: Relevant sections of the company's articles affecting share ownership

6. Appendix A: Tax Treatment Summary: Summary of applicable tax treatment and obligations

7. Appendix B: Regulatory Compliance Checklist: Checklist of required regulatory filings and approvals

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

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Equity Agreement

Cost

Free to use

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