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A Stock Option Agreement spells out how and when employees can buy company shares at a set price through Employee Stock Option Plans (ESOPs) in India. It's the legal contract that puts SEBI-approved stock benefits into action, laying out key details like vesting schedules, exercise prices, and how long options remain valid.

These agreements help Indian companies attract and keep talented employees by offering them a stake in the company's future growth. The document covers crucial points like what happens to options if someone leaves the company, rules around selling shares, and compliance with Indian securities laws and tax regulations under Section 17(2) of the Income Tax Act.

Use a Stock Option Agreement when bringing key employees into your company's growth story through ESOPs. It's essential for startups and growing companies in India looking to attract top talent without heavy cash compensation. The agreement becomes crucial before announcing any stock option grants or when setting up a new ESOP program.

The timing matters most during funding rounds, IPO preparation, or when implementing retention strategies. Companies typically need these agreements when expanding their team with senior hires, establishing performance incentives, or aligning employee interests with company growth goals. Having clear documentation ready helps avoid disputes and ensures SEBI compliance.

• Simple Stock Option Agreement: Basic version for straightforward ESOP grants with standard vesting terms and exercise conditions
• Employee Share Agreement: Focuses on direct share issuance rather than options, typically used for immediate equity grants
• Advisor Stock Option Agreement: Tailored for consultants and board advisors with specialized vesting schedules
• Employee Share Option Agreement: Comprehensive version with detailed performance conditions and milestone-based vesting
• Option Grant Agreement: Emphasizes specific grant terms and conditions, often used for senior executives

• Company Directors and Board: Approve and oversee the ESOP scheme, set pool size, and define key terms of Stock Option Agreements
• HR Managers: Administer the program, explain terms to employees, and maintain documentation
• Legal Counsel: Draft and review agreements to ensure SEBI compliance and tax efficiency
• Employee Recipients: Accept and exercise options according to vesting schedules and conditions
• Company Secretary: Ensures regulatory compliance and maintains statutory records
• Financial Officers: Handle valuation, accounting entries, and tax implications of option grants

• Company Details: Gather board resolutions approving ESOP scheme, total option pool size, and share class details
• Grant Specifics: Define number of options, exercise price, and vesting schedule for each recipient
• Recipient Information: Collect employee details, designation, date of joining, and performance criteria if applicable
• Compliance Check: Review SEBI guidelines and tax implications under Income Tax Act
• Exercise Terms: Specify exercise window, payment methods, and share transfer restrictions
• Exit Provisions: Define what happens to options during resignation, termination, or company sale
• Documentation: Our platform generates customized agreements ensuring all these elements are properly included

• Grant Details: Number of options, exercise price, and precise vesting schedule with milestone dates
• Exercise Terms: Clear procedure for exercising options, payment methods, and timeframes
• Vesting Conditions: Performance criteria, continuous employment requirements, and acceleration triggers
• Transfer Restrictions: Lock-in period, right of first refusal, and share transfer limitations
• Termination Clauses: Treatment of vested/unvested options upon resignation, termination, or death
• Regulatory Compliance: SEBI guidelines references and tax implications under Indian law
• Dispute Resolution: Governing law, jurisdiction, and arbitration procedures
• Amendment Terms: Procedures for modifying agreement terms and conditions

A Stock Option Agreement differs significantly from a Stock Purchase Agreement in several key aspects. While both deal with company shares, they serve distinct purposes and apply in different scenarios under Indian corporate law.

• Timing of Share Transfer: Stock Option Agreements grant future rights to purchase shares at a preset price, while Stock Purchase Agreements facilitate immediate share transfers
• Purpose and Use: Options typically serve as employee incentives with vesting periods, whereas Purchase Agreements execute direct share sales between willing buyers and sellers
• Payment Structure: Option agreements usually involve two stages - grant and exercise, while Purchase Agreements require immediate payment and transfer
• Regulatory Framework: Options fall under SEBI's ESOP guidelines and specific tax treatments, while Purchase Agreements follow standard share transfer regulations
• Documentation Requirements: Option agreements need vesting schedules and exercise terms, whereas Purchase Agreements focus on sale price, warranties, and immediate transfer mechanics