Equity Grant Agreement Template for England and Wales

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Key Requirements PROMPT example:

Equity Grant Agreement

"I need an Equity Grant Agreement for our Series B startup to grant 10,000 share options to our new CTO, with a 4-year vesting schedule starting from March 2025 and including standard good/bad leaver provisions for a UK-based technology company."

Document background
The Equity Grant Agreement is a fundamental document used when companies wish to provide ownership interests to employees, consultants, or other stakeholders. Under English and Welsh law, this agreement establishes the legal framework for equity compensation, detailing crucial elements such as vesting schedules, exercise provisions, and transfer restrictions. It's particularly vital for companies implementing employee incentive schemes, ensuring compliance with Companies Act 2006 requirements and UK tax regulations. The agreement helps protect both the company's and recipient's interests while providing clear documentation for regulatory and administrative purposes.
Suggested Sections

1. Parties: Identification of the company and equity recipient

2. Background: Context of the grant and authority for issuance

3. Definitions: Key terms used throughout the agreement

4. Grant of Equity: Details of shares/options granted, including quantity and class

5. Vesting Provisions: Timeline and conditions for vesting of equity

6. Exercise Terms: Process and conditions for exercising rights

7. Taxation: Tax obligations and responsibilities

Optional Sections

1. Good/Bad Leaver Provisions: Terms applying on termination of employment - used when recipient is an employee

2. Lock-up Period: Restrictions on transfer of shares - used for immediate share grants

3. Tag-Along Rights: Right to join in sale of majority shareholding - used for significant equity stakes

Suggested Schedules

1. Share Certificate: Form of share certificate (if applicable)

2. Shareholders' Agreement: Copy of or extract from existing shareholders' agreement

3. Articles of Association: Relevant extracts from articles

4. Tax Election Forms: Required tax forms (e.g., Section 431 election)

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

Relevant legal definitions
Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing share capital provisions, directors' duties, share issuance and transfer requirements, statutory pre-emption rights, and share registration requirements

Employment Rights Act 1996: Legislation covering employment-related aspects including terms and conditions of employment, and rights and obligations of employees when equity grants are employment-related

Income Tax (Earnings and Pensions) Act 2003: Legislation governing tax treatment of share awards, employee share schemes, and associated reporting requirements

Financial Services and Markets Act 2000: Regulatory framework covering securities regulations, financial promotion restrictions, and investment communication rules

Data Protection Act 2018 and UK GDPR: Legislation governing personal data processing and privacy requirements in relation to equity grants

Enterprise Management Incentives (EMI) legislation: Specific legislation for tax-advantaged share option schemes applicable to qualifying companies

Corporation Tax Act 2009: Legislation covering corporate tax implications of share issues and deductions for employee share acquisitions

Finance Act provisions: Various tax-related provisions for share schemes and annual reporting requirements

Stock Exchange Rules: Regulatory requirements applicable if the company is listed on a stock exchange

Corporate Governance Code: Best practice guidelines for corporate governance that may affect equity grant structures

Articles of Association: Company's constitutional document that may contain specific provisions affecting share issuance and transfers

Shareholders' Agreement: Existing agreements between shareholders that may impact or restrict new equity grants

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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