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Stock Option Agreement Template for Singapore

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Key Requirements PROMPT example:

Stock Option Agreement

"I need a Stock Option Agreement under Singapore law for our Series B startup, granting 50,000 options to our new CTO with a 4-year vesting schedule starting March 2025 and including special provisions for accelerated vesting in case of acquisition."

Document background
The Stock Option Agreement is a crucial document used by Singapore companies to attract, retain, and motivate key employees by offering them the opportunity to acquire ownership in the company. This agreement, governed by Singapore law, details the terms under which stock options are granted, including the number of shares, exercise price, vesting schedule, and conditions for exercise. It's particularly relevant for startups and growing companies looking to conserve cash while offering competitive compensation packages. The agreement must comply with Singapore's corporate, securities, and tax laws, and typically forms part of a broader employee compensation strategy.
Suggested Sections

1. Parties: Identification of the company granting the options and the option holder receiving them

2. Background: Context of the option grant, reference to any employee share option plan, and basis for the agreement

3. Definitions: Key terms used throughout the agreement including 'Option', 'Exercise Price', 'Shares', 'Vesting Date', etc.

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

5. Vesting Schedule: Detailed timeline and conditions for when options become exercisable

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

7. Exercise Price: Specification of the price per share and payment terms

8. Termination Provisions: Treatment of options upon various types of employment termination scenarios

9. Transferability: Restrictions on transfer or assignment of options

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

Optional Sections

1. Change of Control Provisions: Provisions dealing with treatment of options in case of company sale, merger, or other corporate restructuring

2. Lock-up Period: Restrictions on selling shares after exercise, typically used for pre-IPO companies

3. Clawback Provisions: Company's right to recover shares or profits in cases of misconduct or specified circumstances

4. Tax Indemnity: Provisions regarding tax obligations and indemnifications between parties

5. Shareholders' Rights: Special rights or restrictions attached to shares upon exercise

Suggested Schedules

1. Schedule 1 - Notice of Exercise: Template form for the option holder to exercise their options

2. Schedule 2 - Vesting Schedule: Detailed breakdown of vesting dates, quantities, and specific conditions

3. Schedule 3 - Tax Summary: Overview of tax implications and obligations under Singapore law

4. Schedule 4 - Share Option Plan: Copy or extract of the company's share option plan if applicable

5. Schedule 5 - Shareholders' Agreement Provisions: Relevant extracts from company's shareholders' agreement affecting option holders

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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Industries

Companies Act (Cap. 50): Primary legislation governing corporate matters including share issuances, requirements for share capital modifications, and directors' duties and shareholders' rights

Securities and Futures Act (Cap. 289): Regulates securities offerings, disclosure requirements, exemptions for private companies, and requirements for employee share schemes

Income Tax Act: Governs tax treatment of stock options, including Section 7 (defining taxable income), Section 13J (tax treatment of employee share schemes), and employee equity-based remuneration scheme rules

Employment Act: Outlines employee rights and benefits and establishes the relationship between employment and stock options

MAS Guidelines and Regulations: Monetary Authority of Singapore requirements and regulatory requirements for listed companies (if applicable)

SGX Listing Rules: Requirements for share option schemes, disclosure obligations, and shareholder approval requirements for listed companies

Personal Data Protection Act: Covers data privacy considerations and consent requirements for personal information handling in stock 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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