Stock Option Plan Template for Nigeria

A Stock Option Plan gives employees the right to buy company shares at a fixed price within a specific timeframe. In Nigeria, these plans help companies attract and keep talented staff by offering them a chance to become part-owners of the business they work for.

Under Nigerian Securities and Exchange Commission rules, companies must properly document and register their option plans. The plan typically sets out key details like who can participate, how many shares they can buy, the purchase price, and when they can exercise their options. This ownership opportunity creates a direct link between employee performance and company success.

Consider implementing a Stock Option Plan when your Nigerian company needs to attract top talent without spending extra cash. This approach works especially well for growing startups and established companies looking to expand their workforce while conserving capital. It's particularly valuable when competing against larger firms for skilled professionals.

The plan becomes essential during key growth phases - like preparing for an IPO, expanding into new markets, or launching major projects. Many Nigerian tech companies use these plans to attract software developers and executives who might otherwise join multinational corporations. Just ensure your plan aligns with SEC guidelines and Companies and Allied Matters Act requirements.

• Stock Option Plans in Nigeria typically come in three main forms: Incentive Stock Options (ISOs) for senior executives, Non-Qualified Stock Options (NSOs) open to all employees and consultants, and Performance-Based Options that vest based on specific company milestones.
• Time-based vesting plans follow a standard schedule where options become available after set periods, while milestone-based plans unlock shares when the company hits specific targets like revenue goals or market expansion.
• Startup-focused plans often include cliff periods and accelerated vesting provisions, while established companies tend to use longer vesting periods with more traditional exercise windows.

• Company Board & Directors: Approve and oversee the Stock Option Plan, setting key terms like total shares available and vesting schedules
• Legal Counsel: Draft plan documents, ensure SEC compliance, and structure terms that protect company interests
• HR Department: Manages day-to-day plan administration, explains benefits to employees, and tracks vesting milestones
• Eligible Employees: Receive and exercise options according to plan terms, becoming partial owners through share purchases
• Corporate Secretary: Maintains official records, handles regulatory filings, and updates share registers when options are exercised

• Company Details: Gather current share structure, authorized capital, and existing shareholders' information
• Plan Parameters: Define total shares reserved, eligible participants, vesting schedule, and exercise price formula
• Board Approval: Secure formal board resolution authorizing the plan's creation and key terms
• SEC Compliance: Review current Securities and Exchange Commission requirements for option plans
• Documentation: Our platform generates comprehensive Stock Option Plan documents that meet Nigerian legal requirements
• Implementation Steps: Create employee communication materials, option grant templates, and exercise procedures

• Plan Purpose: Clear statement of objectives and scope of the Stock Option Plan
• Eligibility Criteria: Detailed definition of who can participate and qualification requirements
• Share Pool: Total number of shares reserved and their class designation
• Grant Terms: Exercise price, vesting schedule, and expiration periods
• Exercise Procedures: Step-by-step process for converting options to shares
• Termination Provisions: What happens to options upon employment ending
• Regulatory Compliance: References to relevant SEC rules and CAMA requirements
• Amendment Powers: Board's authority to modify plan terms

A Stock Option Plan is often confused with an Equity Incentive Plan, but they serve different purposes in Nigerian corporate structures. While both help companies reward and retain talent, their scope and implementation differ significantly.

• Scope and Flexibility: Stock Option Plans specifically deal with the right to purchase company shares at a preset price, while Equity Incentive Plans can include various forms of equity compensation like restricted stock units, performance shares, and stock appreciation rights
• Tax Treatment: Stock Option Plans have specific tax implications at exercise, while Equity Incentive Plans offer different tax treatments depending on the type of award
• Implementation Complexity: Stock Option Plans typically have simpler structures focused on purchase rights and vesting schedules, whereas Equity Incentive Plans require more complex administration due to their varied award types
• Regulatory Requirements: Stock Option Plans face specific SEC reporting requirements, while Equity Incentive Plans may trigger additional regulatory obligations based on the types of awards offered