Equity Incentive Agreement Template for India

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Key Requirements PROMPT example:

Equity Incentive Agreement

"I need an Equity Incentive Agreement under Indian law for our early-stage startup, granting stock options to our first 10 employees with a standard 4-year vesting schedule starting January 2025 and a one-year cliff period."

Document background
The Equity Incentive Agreement is a fundamental document used by companies in India to formalize the granting of equity-based compensation to employees, directors, or consultants. This agreement is particularly crucial in the current business environment where companies seek to attract and retain top talent by offering ownership stakes. It must comply with various Indian regulations, including the Companies Act, 2013, SEBI guidelines, and relevant tax laws. The document typically outlines the specific terms of equity grants, including the number of shares or options, vesting schedules, exercise prices, and conditions for forfeiture. It's especially relevant for startups and growing companies looking to conserve cash while offering competitive compensation packages. The agreement also addresses key regulatory requirements specific to Indian jurisdiction, such as foreign exchange regulations when applicable, and necessary corporate approvals.
Suggested Sections

1. Parties: Identification of the Company and the Employee/Recipient of the equity incentives

2. Background: Context of the agreement, including the company's equity incentive plan and the basis for granting equity incentives

3. Definitions: Key terms used throughout the agreement, including specific Indian regulatory terms

4. Grant of Equity Incentives: Details of the equity incentives being granted, including type, number, and price

5. Vesting Schedule: Timing and conditions for vesting of the equity incentives

6. Exercise Terms: Conditions and procedure for exercising the equity incentives

7. Regulatory Compliance: Compliance requirements under Indian laws, including SEBI regulations and Companies Act provisions

8. Tax Obligations: Tax implications and responsibilities of both parties under Indian tax laws

9. Restrictions on Transfer: Limitations on transfer of equity incentives and associated rights

10. Termination Provisions: Impact of employment termination on equity incentives

11. Representations and Warranties: Standard declarations by both parties

12. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

13. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability

Optional Sections

1. Lock-in Period: Additional restrictions on sale of shares post-exercise, typically included for senior management

2. Shareholders' Rights: Special rights attached to the shares, included when offering voting or other specific rights

3. Foreign Exchange Compliance: Required when the recipient is a non-resident of India

4. Clawback Provisions: Provisions for recovering vested equity in case of misconduct, typically for senior executives

5. Tag-Along Rights: Included when offering protection in case of majority shareholder sale

6. Non-Competition and Confidentiality: Additional restrictive covenants, often included for senior employees

7. Corporate Governance: Included when granting board seats or special governance rights

Suggested Schedules

1. Schedule 1 - Details of Equity Incentive Grant: Specific details of the grant including number of shares/options, grant price, and vesting dates

2. Schedule 2 - Vesting Schedule: Detailed breakdown of vesting timeline and conditions

3. Schedule 3 - Exercise Notice Format: Template for exercising the equity incentives

4. Schedule 4 - Regulatory Compliance Checklist: List of compliance requirements under Indian law

5. Schedule 5 - Shareholders Agreement Extract: Relevant provisions from the company's shareholders agreement

6. Appendix A - Copy of Equity Incentive Plan: Complete copy of the company's equity incentive plan

7. Appendix B - Tax Computation Examples: Illustrations of tax implications under different scenarios

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 Industries

Technology and Software

Financial Services

E-commerce

Healthcare and Biotech

Manufacturing

Professional Services

Telecommunications

Media and Entertainment

Retail

Education Technology

Clean Technology

Consulting

Relevant Teams

Human Resources

Legal

Finance

Executive Leadership

Corporate Secretarial

Compensation and Benefits

Corporate Governance

Compliance

Board Secretariat

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Senior Software Engineer

Product Manager

Director of Operations

Vice President of Sales

Human Resources Director

Legal Counsel

Department Head

Senior Manager

Principal Engineer

Research Scientist

Business Development Manager

Marketing Director

Financial Controller

Technical Architect

Regional Manager

Industries
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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