The Employee Share Agreement is a fundamental document used by Australian companies to implement employee share ownership schemes, which are increasingly popular as tools for attracting, retaining, and motivating employees. This agreement is essential when companies wish to offer shares to their employees as part of their compensation or incentive package. It must comply with Australian regulatory requirements, including the Corporations Act 2001, ASIC regulations, and tax legislation. The document typically outlines share allocation, vesting schedules, performance conditions, dealing restrictions, and the consequences of employment termination. It's particularly important for both private and public companies implementing employee equity programs, and requires careful consideration of corporate governance, securities laws, and tax implications.
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1. Parties: Identifies the company issuing the shares and the eligible employee
2. Background: Explains the context of the agreement and the company's employee share scheme
3. Definitions and Interpretation: Defines key terms used throughout the agreement and interpretation rules
4. Offer of Shares: Details of the shares being offered, including quantity, class, and price
5. Eligibility and Acceptance: Conditions for participation and process for accepting the offer
6. Vesting Conditions: Specifies the vesting schedule and conditions that must be met
7. Issue of Shares: Process and timing for issuing shares upon satisfaction of vesting conditions
8. Restrictions on Dealing: Limitations on selling, transferring, or encumbering the shares
9. Tax Obligations: Tax implications and responsibilities of both parties
10. Termination of Employment: Impact of employment termination on unvested and vested shares
11. Confidentiality: Obligations regarding confidential information
12. General Provisions: Standard legal provisions including governing law, notices, and amendments
1. Performance Hurdles: Additional performance-based vesting conditions, used when shares vest based on company or individual performance metrics
2. Change of Control: Provisions for handling shares in case of company sale or merger, included for companies anticipating potential corporate transactions
3. Dividend Rights: Terms regarding dividend entitlements for unvested shares, included when dividends are paid during vesting period
4. Buy-Back Provisions: Company's right to repurchase shares, included for private companies or specific share categories
5. International Participants: Additional provisions for employees in other jurisdictions, used for multinational companies
6. Loan Arrangements: Terms of any company loan to fund share purchase, included when company provides financing
7. Share Trading Policy: Additional trading restrictions, mandatory for listed companies
8. Clawback Provisions: Company's right to recoup shares or benefits in specific circumstances, used in executive arrangements
1. Offer Letter: Formal share offer document including specific details of the offer
2. Acceptance Form: Template for accepting the share offer and agreeing to terms
3. Share Plan Rules: Detailed rules governing the overall employee share scheme
4. Vesting Schedule: Detailed timeline and conditions for share vesting
5. Tax Information: Detailed explanation of tax implications and worked examples
6. Valuation Method: Methodology for determining share value (especially important for unlisted companies)
7. Nominated Beneficiary Form: Form for designating beneficiaries in case of participant's death
8. Restriction Deed: Additional deed regarding trading restrictions and holding locks
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