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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: Law
Satisfied Customers: 4312
Experience:  English solicitor with over 12 years experience
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My son has recently been offered Share Options in the company

Customer Question

My son has recently been offered Share Options in the company he works for. What we are looking for is:

Someone to read through the Draft Document - I believe it is a fairly standard document
Written comments if there are areas of concern.

Please can you provide me with a cost.

Thank you
Submitted: 3 years ago.
Category: Law
Expert:  UKSolicitorJA replied 3 years ago.

UKSolicitorJA :

Hello,

UKSolicitorJA :

This is a Q&A site so I am not sure whether you are in the right place as it seems like you would have to visit a Solicitor's office and seek the advice you are looking for.

UKSolicitorJA :

However, if you have any specific questions on the documentation, please ask.

Customer:

Thanks for your quick response. I am finding it very difficult to get someone to check this document.

UKSolicitorJA :

If you feel there is anything in the document which is not clear, please type the relevant wording here and I can advise on it.

UKSolicitorJA :

Not every solicitor is able to advise on such a subject as it is a specialised area

Customer:

Sorry it is a ten page document, admittedly small pages and the first few are 'Definitions' Can you suggest any of your colleagues who would be able to help please?

UKSolicitorJA :

You may try uploading the document here. You would probably have to find a London firm of commercial lawyers who would be able to advise

UKSolicitorJA :

We are not allowed to recommend anyone particular I am afraid so you would need to search yourself, the Law Society find a solicitor search facility online is useful

UKSolicitorJA :

Your son may also ask the employer's HR department if he is not clear about any aspect of the share options

Customer:

Here is the document. There appears to be no facility to upload it on this site:

Customer:

BDO AUSTRALIA DRAFT 1



GLOBAL GROUP (UK) LIMITED


 


OPTION AGREEMENT – AUSTRALIAN RESIDENT EMPLOYEES





THIS AGREEMENT is made on 28 February 2014


 


BETWEEN:


 












Global Group (UK) Limited (company number(NNN) NNN-NNNN) of


Exchange Plaza,XXXXX London W5 2ST (the “Company”);


 


 



(the “Option Holder”).


 



Background


 


The Company has agreed to grant an option to the Option Holder to acquire ordinary B shares in the capital of the Company on the terms and conditions set out in this Agreement.


 


This Agreement contains all of the conditions and restrictions affecting the terms or extent of the Option Holder’s entitlement.


 


Operative provisions


 



  1. 1. Definitions


 


1.1 In this Agreement the following words and expressions shall have the following meanings:


 


































"Acting in Concert"



has the meaning given to it in The City Code on Takeovers and Mergers and the Rules Governing Substantial Acquisitions of Shares published by the Panel on Takeovers and Mergers (in each case as amended from time to time)


 



“Auditors”



the auditors for the time being of the Company (acting as experts and not as arbitrators) or if no audit is carried out the independent accountants appointed by the company


 



“Bad Leaver”


 



is an employee who leaves the company for reasons of resignation, dismissal on grounds of misconduct, proven poor performance or proven dishonest conduct


 



“Board”



the board of directors of the Company or a duly constituted committee thereof


 



“Control”



has the same meaning as in Section 995 of Income Tax Act 2007 (United Kingdom)


 



“Date of Grant”



the date of this Agreement, being the date on which the Option was granted under this Agreement


 



“Date of Termination of Employment”


 



date upon which an Option Holder is no longer employed by, or ceases to hold a salaried office in the Company



 






































“Good Leaver”


 



an employee who leaves the company for reasons of death, invalidity , bona fide redundancy or retirement


 



"Group"



the Company and any company of which the Company has Control and "Group Company" shall mean any of them



 



 



“Option”



the right to acquire the Option Shares at the Option Price in accordance with this Agreement


 



“Option Holder”



the individual to whom the Option has been granted or his personal representatives


 



“Qualifying Exchange of Shares”



There is a qualifying exchange of shares if the acquiring company obtains all the shares in the old Company and the following conditions are met:



  • the consideration for the shares in the old Company consists wholly of the issue of shares in the acquiring company

  • the new shares are issued when the new shares and subscriber shares are the only shares issued in the acquiring company

  • the consideration for new shares of each description consists wholly of old shares of a corresponding description

  • new shares of each description are issued to holders of old shares of the corresponding description in proportion to their holdings



 



 



“Replacement Shares”



Shares under an Option that are provided under a Qualifying Exchange of Shares



 














“Share”



an ordinary B share of £0.01 in the capital of the Company



 



 



 


 


















“Tax Liability”



Australian income tax liability (including Medicare levy) due in respect of the grant, Vest or exercise of Options to the Australian Taxation Office


 



“Vest”



the Option Holder becomes unconditionally entitled to exercise the Option free of any restrictions


 



“Vesting Date”



the date on which Vest occurs and from which the Option Holder may exercise the Option.



 


1.2 Where the context so admits the singular shall include the plural and vice versa and the masculine shall include the feminine.


 


1.3 Any reference in this Agreement to any enactment includes a reference to that enactment as from time to time modified, extended or re-enacted.


 



  1. 2. Grant of Option


 


2.1 The Company grants to the Option Holder the right to acquire ● Shares (subject to any adjustment as provided in Clause 8) (the “Option Shares”) at £0.01 per Option Share (subject to any adjustment as provided in Clause 9) (the "Option Price").


 


2.2 The Option is granted for commercial reasons in order to retain the Option Holder as an employee of a Group Company and not as part of a scheme or arrangement the main purpose, or one of the main purposes, of which is the avoidance of tax.


 


2.3 This Agreement and others in a similar form to it are made pursuant to an employees’ share scheme established by the Company called the Global Group EMI Scheme (the “Scheme”).


 



  1. 3. Non-transferability of the Option


 


Neither this Option nor any rights under it may be transferred, assigned or charged and any such actual or purported transfer, assignment or charge shall cause the Option to lapse immediately.


 



  1. 4. Vesting Date


 


4.1 Subject to clause 7 (provided the Option has not lapsed), the Company will determine in its absolute discretion, the Vesting Date for the Options which shall occur on the earlier of:


i) such date as the Company shall so determine but not earlier than three (3) years from the Date of Grant; and


ii) the seventh anniversary of the Date of Grant


 



  1. 5. Termination of Employment


 


5.1 If an Option Holder’s employment with the Company terminates as a Bad Leaver, the Options granted that have not vested, shall be forfeited in their entirety and will lapse immediately on the Date of Termination of Employment.


 


5.2 If an Option Holder’s employment with the Company terminates as a Good Leaver the Options shall vest on the original Vesting Date.


 



  1. 6. Exercise of Option


 


6.1 Subject to Clause 4 and 9, the Option (provided that it has not lapsed) may be exercised in whole or in part at any time following the earliest of the following events:


i) immediately on (i) the admission to listing of the Company's shares to the Official List of the Financial Conduct Authority or (ii) the grant of permission for dealings on the AIM Market of London Stock Exchange plc, or (iii) admission to listing on any recognised investment exchange (as that term is used in section 285 of the Financial Services and Markets Act 2000);


 


ii) any event set out in Clause 7 on which the Option becomes exercisable; or


 


iii) seven days after notification to the Option Holder of a decision taken at the discretion of the Board to permit the exercise of the Option because the Board believe this is appropriate following a change in the circumstances of the Company and/or its business since the Date of Grant;


 


6.2 The Option shall lapse on the earliest of the following events:


 


i) the tenth anniversary of the Date of Grant;


 


ii) immediately following the Option Holder ceasing to be an employee of any Group Company (other than in circumstances where he remains, or immediately thereupon becomes, an employee of, or a consultant to, another Group Company), subject to Clause 5.2 above;


iii) in the circumstances set out in Clause 7; or


 


iv) the Option Holder being adjudicated bankrupt.


 



  1. 7. Sale, re-organisation etc.


7.1 If any person obtains Control of the Company as a result of:


i) entering into an agreement to:


a) acquire the whole of the issued share capital of the Company; or


b) acquire all of the shares in the Company which are of the same class as the Shares; or


ii) making:


a) a general offer to acquire the whole of the issued share capital of the Company which is made on a condition such that if it is satisfied the person making the offer will have Control of the Company; or


b) a general offer to acquire all of the shares in the Company which are of the same class as the Shares,


 


then the Option may, subject to Clause 7.4, be exercised within six months of the date the person obtains Control of the Company.


 


7.2 If under Sections 895 to 901 of the Companies Act 2006 (UK) the Court sanctions a compromise or arrangement proposed for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies, the Option may, subject to Clause 7.4, be exercised within six months of the Court sanctioning the compromise or arrangement.


 


7.3 If any person becomes bound or entitled to acquire shares in the Company under Chapter 3 of Part 28 of the Companies Act 2006 (UK), the Option may, subject to Clause 5.4, be exercised at any time when that person remains so bound or entitled.


 


7.4 If as a result of the events specified in Clauses 7.1 or 7.2 a company has obtained Control of the Company, or if a Qualifying Exchange of Shares takes place and the new shares would be Replacement Shares or if a company has become bound or entitled as mentioned in Clause 7.3, the Option Holder may, by agreement with that other company (the “Acquiring Company”), six months release the Option (the “Old Option”) for an Option (the “New Option”) which satisfies the conditions that:


 


i) There is a 100% Corporate takeover


 


ii) The New Option matches the Old Option


 


iii) The Option Holder no longer holds the Old Option


 


iv) After the corporate takeover or restructure, the Option Holder is an employee of:



  • the Acquiring Company

  • a subsidiary of the Acquiring Company

  • a holding company of the Acquiring Company

  • a subsidiary of the holding company of the Acquiring Company


 


The New Option shall, for all other purposes of this Agreement, be treated as having been acquired at the same time as the Old Option.


 


Where a New Option is granted:


 


a) this Agreement shall, in relation to the New Option, be construed as if references to the Company and the Shares were references to the Acquiring Company or, as the case may be, to the other company over whose shares the New Option applies and to the shares in that other company, but references to Group Company shall continue to be construed as if references to the Company in the definition of Group remain references to Global Group (UK) Limited (company number(NNN) NNN-NNNN; and


 


b) the New Option shall not be exercisable in accordance with Clauses 8.1, 8.2 or 8.3 above by virtue of the event by reason of which the New Option was granted.


 


7.5 If the Company passes a resolution for voluntary winding up, the Option may be exercised within six months of the passing of the resolution.


 


7.6 For the purposes of this Clause 7, other than Clause 7.4, a person shall be deemed to have obtained Control of a Company if he and others Acting in Concert with him have together obtained Control of it.


 


7.7 The exercise of the Option pursuant to the preceding provisions of this Clause 8 shall be subject to the provisions of Clause 9 below.


 


7.8 Where in accordance with Clause 7.4 the Option is released and a New Option granted, the New Option shall not be exercisable in accordance with Clauses 7.1, 7.3 and 7.4 above by virtue of the event by reason of which the New Option was granted.


7.9 Notwithstanding Clause 7.1, if the Board conclude in their discretion that a person will obtain Control of the Company pursuant to any of the circumstances set out in Clause 7.1 or otherwise ("Change of Control Event"), they may (subject to the Board not breaching any confidentiality undertakings), determine that the Option shall become exercisable prior to, but conditional on, the Change of Control Event and shall notify the Option Holder in writing of this and of a period during which the Option Holder may exercise the Option prior to the Change of Control Event occurring ("Notice of Sale").


7.10 The Board may in the Notice of Sale vary the requirements of Clause 10.1 and in addition provide for the Company to receive from any purchase money for the Option Shares an amount equal to the total of the aggregate Option Price (for the number of Shares in respect of which the Option is exercised) and any Tax Liability (the "Withheld Amount") and apply this to pay the Option Price and any Tax Liability. The Notice of Sale may also provide for the Company to:


i) receive the purchase money on behalf of the Option Holder;


ii) give a valid discharge to the purchaser for it; and


iv) pay such purchase money to the Option Holder less any Withheld Amount as soon as reasonably practicable following the receipt of cleared funds.


 


7.11 If the Change of Control Event anticipated in Clause 7.9 does not occur, the Board shall, as soon as is reasonably practicable, notify the Option Holder in writing of this. In such circumstances, the Board shall return to the Option Holder any remittance in payment for the number of Shares in respect of which the Option has been exercised and any payment in respect of any tax or social security liability relating to such conditional exercises, if appropriate, and the Option shall continue to subsist as before.


 


7.12 If the Change of Control Event anticipated in Clause 7.9 does occur then the Option shall lapse immediately to the extent that it has not been exercised prior to the Change of Control Event taking place.


 


7.13 If a general offer is made to acquire the whole or any part of the issued ordinary share capital of the Company which, on it becoming or being declared unconditional and the buyer completing the acquisition, would constitute a change of Control, then the provisions of Clauses 7.1 and 7.9 to 7.12 inclusive shall apply thereto and the change of Control shall be treated as taking place when the offer becomes or is declared unconditional.


 


 


 


 



  1. 8. Variation of share capital


 


In the event of any variation of the share capital of the Company by way of capitalisation or rights issue, consolidation, subdivision or reduction of capital or otherwise, the number of Option Shares and the Option Price shall be adjusted in such manner as the Auditors confirm in writing to be fair and reasonable provided that:


 


i) the aggregate amount payable on the exercise of the Option in full is not increased; and


 


ii) the Option Price is not reduced below the nominal value of a Share.


 



  1. 9. Manner of exercise


 


9.1 The Option shall be exercised by the Option Holder giving notice to the Company in writing of the number of Shares in respect of which he wishes to exercise the Option accompanied by a cheque made payable to the company for the appropriate payment and this Agreement and shall be effective on the date of its receipt by the Company.


 


9.2 Shares shall be allotted and issued or transferred pursuant to a notice of exercise within 30 days of the date of exercise and a definitive share certificate issued to the Option Holder in respect thereof. Save for any rights determined by reference to a date preceding the date of allotment, such Shares shall rank pari passu with the other shares of the same class in issue at the date of allotment.


 


9.3 When the Option is exercised only in part, the balance shall remain exercisable on the same terms as originally applied to the whole Option and this Agreement shall be returned amended accordingly by the Company as soon as possible after the partial exercise.


 



  1. 10. Taxation


 


10.1 Grants made under the Scheme are subject to Australian income tax under Division


83A-C of the Income Tax Assessment Act 1997 (Cth).


 


10.2 The Option Holder is responsible for ensuring they are tax compliant and all income tax obligations with respect to the Share Options are met.


 


10.3 This information is not intended to be specific taxation advice. The tax consequences of buying, holding and disposing of Options will depend on the Option Holder’s personal circumstances and it is the responsibility of the Option Holder to seek specific tax advice pertaining to their facts and circumstances.


10.4 If a tax withholding obligation arises in respect of the Option (ie: where the Employer does not have the employee’s Tax File Number or Australian Business Number) the relevant Employer of the Option Holder shall be entitled to deduct to the extent permitted by law such amount from any payment due to be made by the Employer to or in respect of the Option Holder.


 


10.5 If and to the extent that the tax withholding obligation referred to in Clause 10.4 exceeds the amount from which deductions can be made in respect of the Option Holder, the Option Holder shall pay to the Employer the amount of the excess within the period of 60 days from the date that the event takes place that gives rise to the liability.


 


10.6 Where a tax withholding arises in respect of the exercise of the Option, the Board may, without prejudice to the employer’s rights under Clause 10.1 or 10.2, by written notice to the Option Holder concerned nominate any person to sell such number of Option Shares as may be required in order to fund the tax withholding requirement.


 



  1. 11. Restrictions


 


11.1 Option Shares are subject to any pre-emption rights and other restrictions contained in the Company’s Memorandum and Articles of Association (as amended from time to time), the contents of which are also incorporated by reference into this Agreement so as to form part of it.


 


11.2 If any person makes an offer that if accepted will lead to a change in Control of the Company the Board may by written notice to the Option Holder nominate any person to sell Option Shares on such a change in Control on the same terms as all other shares of the same class and execute any documents including a stock transfer form and any indemnity in respect of any lost share certificate. The proceeds of such a sale will be accounted for to the Option Holder within 30 days of such sale. After the proposed purchaser has been registered as the holder of any such Shares, the validity of such proceedings shall not be questioned by any person.


 



  1. 12. Administration and amendment


 


12.1 Any notice to be given under this Agreement:


i) must be in writing;


ii) may be given to a company at its registered office (or such other address as it may notify to the Option Holder for such purpose) or to the Option Holder at his last known home or other personal address (or such other address as he may notify to the Company for such purpose); and


iii) will be effectively served:


(a) on the day of receipt, where any hand delivered letter, fax or email message is received on any Business Day (being any day between Monday and Friday other than British or Australian public or bank holidays) before or during normal working hours;


 


(b) on the following Business Day, where any fax, email message or hand delivered letter is received either on any Business Day after normal working hours or on any day which is not a Business Day; or


 


(c) on the second Business Day following the day of posting, upon despatch from within the United Kingdom or Australia of any posted letter by prepaid postage and in proving such service it shall only be necessary to prove that the same was stamped, addressed and posted as aforesaid.


 


No other means of giving notice is permitted.


 


12.3 The Company shall at all times keep available sufficient authorised and unissued Shares to satisfy the exercise of the Option to the extent that it has neither lapsed nor been fully exercised, taking account of any other obligations of the Company to issue unissued Shares.


 



  1. 13. Conditions


 


13.1 It shall be a condition of the grant of the Option that it does not form part of the Option Holder’s contract of employment or his entitlement to remuneration or benefits under such contract.


 


13.2 The Option Holder shall not be entitled to any compensation or damages for any loss or potential loss which arises by reason of:


 


i) any loss or alteration of his rights or expectations under the Option; or


 


ii) any change of any expected tax treatment on the exercise of the Option or on any subsequent disposal of any Shares obtained on such exercise,


 


in consequence of the loss or termination of his office or employment for any reason whatsoever (including a termination which arises by reason of a dismissal which is a wrongful or unfair dismissal).


 



  1. 14. Governing Law


14.1 English law only shall apply to the whole of this Agreement and each party agrees to submit to the non-exclusive jurisdiction of the English Courts.


14.2 References to legislation are references to English laws and statutes.


 


IN WITNESS WHEREOF the parties have executed this Agreement as a deed on the above Date of Grant


 


 


Executed and unconditionally delivered as a deed for and on behalf of Global Group (UK) Limited.



 


____________________________


Authorised signatory


 


 


Executed and unconditionally delivered as a deed by:


 


 


____________________________


(Option Holder)


 


In the presence of :


 


Witness:


 


Signature of witness: …………………………………………….


 


Name of witness (PRINT): …………………………………………….


 


Address of witness: …………………………………………….


 


…………………………………………….


 


…………………………………………….


 


Occupation of witness: …………………………………………….


 










THIS AGREEMENT IS IMPORTANT


THE OPTION HOLDER SHOULD KEEP THIS AGREEMENT IN A SAFE PLACE




 


 

UKSolicitorJA :

Okay, I can see the document

UKSolicitorJA :

The document gives you son the option to acquire shares in the company for 1p a share. The shares will vest in your son between 3 and 7 years of the date the options were granted to your son

UKSolicitorJA :

The vesting date will be decided by the employer and the shares will only vest if your son remains employed at the relevant time or of he is a good leaver (as defined in the document)

UKSolicitorJA :

It is a standard document and your son should exercise his options as soon as he is able to

UKSolicitorJA :

for whatever number of shares he is able to exercise the options over as it will only cost him 1p a share

UKSolicitorJA :

Clause 6 provides when your son is able to exercise his options

UKSolicitorJA :

Clause 9 sets out the procedure to be followed by your son when exercising his options

UKSolicitorJA :

and payment

UKSolicitorJA :

There should be a document from the employer explaining in plain English how the scheme works and advising on taxation etc

UKSolicitorJA :

Your son should ask for this

UKSolicitorJA :

May I help further?

UKSolicitorJA and other Law Specialists are ready to help you
Customer: replied 3 years ago.

Thank you for your assistance in this matter and for your clear answers. As the Options Document is a 'standard' one, do you think it is necessary for me to obtain more legal advice?

Expert:  UKSolicitorJA replied 3 years ago.
Not at this point.

All the best
Customer: replied 3 years ago.

OK many thanks.

Expert:  UKSolicitorJA replied 3 years ago.

You may come back to me if you need further assistance, asking for me specifically to answer the question.