Equity Incentive Plan Template for Pakistan

An Equity Incentive Plan helps companies reward and retain valuable employees by offering them ownership stakes through stocks, options, or similar securities. Under Pakistani corporate law, these plans let businesses share their success with key team members while following SECP (Securities and Exchange Commission of Pakistan) guidelines.

These plans typically include details about who can participate, how many shares are available, vesting schedules, and exercise prices. They're especially popular among Pakistani startups and tech companies looking to attract top talent without spending large amounts of cash. The plan must comply with the Companies Act 2017 and receive proper shareholder approval before implementation.

Consider implementing an Equity Incentive Plan when your Pakistani company needs to attract or retain top talent without depleting cash reserves. This strategy works particularly well for startups and growth-stage businesses competing for skilled professionals against larger, cash-rich corporations. Many tech companies in Pakistan's major cities use these plans to offer competitive compensation packages.

The plan becomes essential when expanding your team, preparing for significant growth, or planning an IPO. It's also valuable when key employees seek long-term investment in the company's success. Just ensure your plan aligns with SECP regulations and includes clear vesting schedules to encourage long-term commitment.

• Stock Options Plans: Most common in Pakistani tech startups, offering employees the right to buy company shares at a fixed price after a vesting period
• Restricted Stock Units (RSUs): Grants actual shares to employees over time, popular among established companies and banks in Pakistan
• Performance Share Plans: Links equity rewards to specific company or individual performance metrics, common in larger Pakistani corporations
• Employee Stock Purchase Plans: Allows employees to buy company shares at a discount, typically used by listed companies under SECP guidelines
• Phantom Stock Plans: Provides cash bonuses based on share value increases without actual equity transfer, useful for private companies

• Board of Directors: Approves and oversees the Equity Incentive Plan, ensuring alignment with company strategy and SECP regulations
• HR Department: Manages plan implementation, tracks vesting schedules, and coordinates with eligible employees
• Legal Counsel: Drafts plan documents, ensures compliance with Pakistani corporate law, and handles regulatory filings
• Employees: Participate as plan beneficiaries, receiving stock options or other equity-based incentives
• Company Secretary: Maintains official records, handles shareholder communications, and manages SECP compliance
• External Auditors: Review and validate equity distributions, ensuring proper accounting treatment

• Company Details: Gather corporate registration info, shareholding structure, and authorized capital details
• Plan Scope: Define total shares allocated, eligible employees, and vesting schedule terms
• Board Approval: Secure board resolution authorizing the plan and its key terms
• SECP Requirements: Review current regulations for equity-based compensation schemes
• Financial Impact: Calculate dilution effects and tax implications under Pakistani law
• Documentation: Prepare grant agreements, exercise forms, and shareholder notifications
• Implementation Timeline: Create rollout schedule including employee communication and training

• Plan Purpose: Clear statement of objectives and scope of equity incentives
• Eligibility Criteria: Detailed qualification requirements for participation
• Share Pool: Total number of shares reserved and their class designation
• Vesting Schedule: Specific timeline and conditions for equity rights maturation
• Exercise Terms: Price, method, and period for converting options to shares
• Termination Provisions: Rights and restrictions upon employment cessation
• Transfer Restrictions: Limitations on selling or transferring equity awards
• Administrative Powers: Board authority and plan management procedures
• Governing Law: Reference to Pakistani corporate laws and SECP regulations

An Equity Incentive Plan differs significantly from a Simple Agreement for Future Equity (SAFE) in several key aspects under Pakistani corporate law. While both involve equity distribution, their purposes and structures are quite different.

• Primary Purpose: Equity Incentive Plans focus on rewarding and retaining employees through structured share ownership, while SAFEs are investment instruments used to raise capital from external investors
• Timing of Equity: Incentive Plans typically have defined vesting schedules, whereas SAFEs convert to equity only upon triggering events like funding rounds
• Regulatory Requirements: Incentive Plans must comply with SECP employment compensation rules, while SAFEs fall under investment and securities regulations
• Target Participants: Incentive Plans are designed for employees and executives, but SAFEs target early-stage investors and angels
• Implementation Complexity: Incentive Plans require more extensive documentation and ongoing administration compared to SAFEs' simpler, one-time agreement structure