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Employee Stock Grant Agreement Template for England and Wales

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Key Requirements PROMPT example:

Employee Stock Grant Agreement

"I need an Employee Stock Grant Agreement for a senior software developer joining our UK tech startup, with a 4-year vesting schedule starting March 2025 and including both good/bad leaver provisions and a one-year cliff period."

Document background
The Employee Stock Grant Agreement is a crucial document used when companies wish to award shares to employees as part of their compensation or incentive package. Governed by English and Welsh law, this agreement details the specific terms of share grants, including quantity, class of shares, vesting schedule, and associated rights and obligations. It's particularly important for companies looking to align employee interests with corporate success, retain key talent, and comply with UK regulatory requirements regarding employee share schemes. The agreement must address tax implications, company law requirements, and employment law considerations while providing clear mechanisms for share transfers and eventual ownership.
Suggested Sections

1. Parties: Identifies the company and the employee receiving the stock grant

2. Background: Context of the grant and reference to any share scheme

3. Definitions: Key terms used throughout the agreement including share classes, vesting periods, and other technical terms

4. Grant of Shares: Details of shares being granted including number, class, and nominal value

5. Vesting Provisions: Timeline and conditions for share vesting, including performance conditions if applicable

6. Tax Obligations: Tax implications and responsibilities for both employer and employee

7. Termination Provisions: Effects of employment termination on share grants under different scenarios

8. Governing Law and Jurisdiction: Specification of English and Welsh law as governing law and relevant courts

Optional Sections

1. Lock-up Period: Restrictions on share transfers post-vesting, typically used when company wants to restrict immediate sale of shares

2. Malus and Clawback: Provisions for recovering or cancelling awards, typically included for senior executives or in regulated industries

3. Change of Control: Treatment of awards during corporate transactions such as sale or merger

4. Good/Bad Leaver Provisions: Detailed provisions on treatment of shares based on circumstances of employment termination

5. Shareholder Rights: Special provisions regarding voting rights, dividend rights, and other shareholder privileges

Suggested Schedules

1. Schedule 1 - Share Details: Detailed description of shares including rights, restrictions, and nominal value

2. Schedule 2 - Vesting Schedule: Detailed timeline of vesting dates and quantities of shares vesting at each date

3. Schedule 3 - Tax Summary: Overview of tax implications and worked examples for different scenarios

4. Schedule 4 - Company Articles Extracts: Relevant provisions from articles of association affecting the granted shares

5. Schedule 5 - Share Plan Rules: Reference to or extract from the company's share plan rules if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions












































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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company operations, including share capital provisions, directors' duties, share transfer and registration requirements, and disclosure obligations

Employment Rights Act 1996: Fundamental employment legislation covering employment status, rights, and terms and conditions of employment that may affect stock grants

Income Tax (Earnings and Pensions) Act 2003: Tax legislation governing the treatment of share awards and employment-related securities provisions

Financial Services and Markets Act 2000: Regulatory framework for financial services, including securities regulations and financial promotion restrictions

UK Corporate Governance Code: Best practice guidelines for listed companies, including provisions on remuneration policies and share schemes

Data Protection Act 2018 and UK GDPR: Legislation governing the processing of employee personal data and privacy requirements in relation to share schemes

Equality Act 2010: Anti-discrimination legislation ensuring equal treatment in share schemes and preventing discriminatory practices

Finance Act provisions: Annual tax legislation updates affecting share schemes and related tax treatment

HMRC Requirements: Tax authority rules covering share valuation, tax reporting obligations, and registration requirements for share schemes

Market Abuse Regulation (UK MAR): Regulations preventing market abuse, including insider dealing provisions and market manipulation rules

Common Law Principles: Fundamental legal principles from case law covering contract law, fiduciary duties, and trust law applicable to share schemes

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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