Share Option Agreement Template for Singapore

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Key Requirements PROMPT example:

Share Option Agreement

"I need a Share Option Agreement for our Singapore tech startup to grant 50,000 options to our new CTO, with a 4-year vesting schedule starting March 2025 and including standard good/bad leaver provisions."

What is a Share Option Agreement?

A Share Option Agreement is commonly used by Singapore companies to attract, retain, and motivate key employees and stakeholders by offering them the opportunity to acquire ownership in the company. The agreement outlines the terms under which options can be exercised, including vesting schedules, exercise prices, and conditions precedent. Under Singapore law, these agreements must comply with specific regulatory requirements, including those set by the Monetary Authority of Singapore and the Securities and Futures Act. The document is particularly important for startups and growing companies looking to align employee interests with company success.

What sections should be included in a Share Option Agreement?

1. Parties: Identification of the company and option holder

2. Background: Context of the agreement and share option scheme

3. Definitions: Key terms used throughout the agreement

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

5. Vesting Schedule: Timing and conditions for option vesting

6. Exercise of Option: Process and conditions for exercising options

7. Termination Provisions: Consequences of employment termination on options

What sections are optional to include in a Share Option Agreement?

1. Change of Control Provisions: Terms applying in case of company sale or merger - recommended for companies considering potential exit events

2. Lock-up Period: Restrictions on selling shares after exercise - recommended for pre-IPO companies or when retention is critical

3. Clawback Provisions: Company's right to recover shares or profits - recommended when additional security measures are needed

What schedules should be included in a Share Option Agreement?

1. Option Certificate: Formal document evidencing the grant of options

2. Exercise Notice: Template form for exercising options

3. Share Option Plan Rules: Complete rules of the share option scheme

4. Shareholders' Agreement: Reference to existing shareholders' agreement terms

5. Tax Implications Summary: Overview of tax consequences for option holder

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

Clauses
Industries

Companies Act (Cap. 50): Primary legislation governing corporate matters including share issuance, transfers, requirements for share option schemes, and director/shareholder approval requirements

Securities and Futures Act (Cap. 289): Regulates securities offerings, including prospectus requirements and exemptions, and defines securities and regulated activities

Singapore Exchange (SGX) Listing Rules: For listed companies: specifies requirements for share option schemes, disclosure obligations, and shareholder approval requirements

Income Tax Act: Covers tax treatment of share options, Qualified Employee Equity-Based Remuneration Scheme (EEBR), and related reporting requirements

Employment Act: Addresses employee rights and benefits, including employment terms related to share options

MAS Guidelines: Monetary Authority of Singapore regulations covering corporate governance requirements and disclosure obligations

Vesting Schedule Requirements: Key considerations for structuring vesting conditions and schedule in the share option agreement

Exercise Price Mechanisms: Requirements and considerations for determining and setting exercise prices for share options

Share Rights Documentation: Documentation requirements for rights attached to shares under the option agreement

Transfer Restriction Rules: Legal framework for implementing and documenting share transfer restrictions

Termination Provisions: Legal requirements and considerations for structuring termination clauses in share option agreements

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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