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Option Grant Agreement

Option Grant Agreement Template for Malaysia

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Key Requirements PROMPT example:

Option Grant Agreement

"I need a Malaysian Option Grant Agreement for our tech startup, granting 50,000 stock options to our incoming CTO with a four-year vesting schedule starting March 2025, including special provisions for accelerated vesting in case of a company sale."

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Document background
The Option Grant Agreement serves as a crucial document in Malaysian corporate practice for companies looking to provide equity-based incentives to their employees or other eligible participants. It is typically used as part of a broader employee share option scheme (ESOS) or employee share ownership plan (ESOP), particularly in companies seeking to attract and retain talent by offering long-term incentives. The agreement must comply with Malaysian regulatory requirements, including the Capital Markets and Services Act 2007, Companies Act 2016, and relevant Securities Commission guidelines. It details the specific terms of option grants, including vesting conditions, exercise procedures, and restrictions on transfer, while also addressing tax implications under Malaysian law. This document is essential for establishing clear rights and obligations between the company and option holders, providing a legally enforceable framework for equity compensation.
Suggested Sections

1. Parties: Identifies the company granting the options and the option recipient (grantee)

2. Background: Sets out the context of the option grant, including reference to any employee share option scheme

3. Definitions: Defines key terms used throughout the agreement

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

5. Vesting Schedule: Specifies when and how the options become exercisable

6. Exercise of Options: Procedures and requirements for exercising the options

7. Term and Expiration: Duration of the option and circumstances of expiration

8. Restrictions on Transfer: Limitations on transferring or assigning the options

9. Taxation: Tax obligations and responsibilities of the parties

10. Compliance with Laws: Requirements for compliance with Malaysian securities laws and regulations

11. Data Protection: Provisions regarding the handling of personal data under Malaysian law

12. Governing Law and Jurisdiction: Specifies Malaysian law as governing law and jurisdiction for disputes

Optional Sections

1. Change of Control Provisions: Provisions addressing what happens to options in case of company ownership changes

2. Good Leaver/Bad Leaver Provisions: Specific terms for different types of employment termination scenarios

3. Clawback Provisions: Terms allowing the company to recoup options under specific circumstances

4. Lock-up Period: Restrictions on selling shares acquired through option exercise

5. Shareholders' Agreement Adherence: Requirement to adhere to existing shareholders' agreement upon exercise

6. Non-Competition and Confidentiality: Additional restrictions and obligations on the option holder

7. Corporate Restructuring: Provisions for adjusting options in case of corporate restructuring

Suggested Schedules

1. Option Certificate: Formal certificate detailing the specific option grant terms

2. Exercise Notice: Template form for exercising options

3. Vesting Schedule Details: Detailed breakdown of the vesting timeline and conditions

4. Share Option Plan Rules: Complete rules of the share option plan referenced in the agreement

5. Regulatory Compliance Checklist: List of Malaysian regulatory requirements and compliance steps

6. Tax Treatment Summary: Summary of Malaysian tax implications for option grants and exercises

7. Shareholders' Rights: Summary of rights attached to the shares upon exercise

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Human Resources

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CEO

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