Share Vesting Agreement
A Share Vesting Agreement is a document that enables a company to implement vesting conditions on certain shareholders’ shares.
4.4 (25 reviews)
Last updated February 3, 2025
Under 10 minutes
Suitable for Australia
Written by
Edwin Montoya Zorrilla
Reviewed by
Damin Murdock
Document Overview
A Share Vesting Agreement is a document that enables a company to implement vesting conditions on certain shareholders’ shares. This agreement is to be used when the shares have already been issued in full and the company would like to add vesting conditions to those shares. If the vesting conditions are not met, the company has the right to ‘claw’ back the shares under this agreement. This document includes the details of the shareholder that the vesting applies to and the vesting criteria the Shareholder must satisfy.
When the requirements have been met and the shares are vested, the shareholder can retain them outright. There is no responsibility to sell these shares back to the company, even if the individual leaves the business. Vested share arrangements are an effective way for companies to encourage loyalty, help motivate co-founders to stay with a startup business and reassure investors that there is a long term commitment overall .
This Vesting Agreement will involve tax implications. It is highly recommended that you have a lawyer help you when selecting the appropriate legal documents and understanding their implications.
The Legal Risk Score of a Share Vesting Agreement Template
Our legal team have marked this document as medium risk considering:
- The agreement allows the company to buy back shares from the shareholder under certain conditions, which could potentially limit the shareholder's financial benefits if they fail to meet specific criteria or breach the agreement.
- The confidentiality clause strictly prohibits the shareholder from disclosing any confidential information, which could restrict their ability to use such information for personal or business purposes without explicit consent, potentially affecting their other business interests.
- The vesting process may be long and must be carefully managed.
Share Vesting Agreement Checklist
Complete your free Share Vesting Agreement with our checklist
Compliance with Vesting Criteria
Regularly review the vesting criteria and specific vesting conditions to ensure ongoing compliance and avoid potential forfeiture of shares.
Confidentiality Maintenance
Continuously safeguard confidential information as stipulated, and ensure all parties understand their obligations regarding non-disclosure.
Use this Share Vesting Agreement if:
- Your company has issued shares and you would like to add vesting conditions would like to issue vesting shares to your employees or other individuals
- You want to promote loyalty and long-term commitment
What does this Share Vesting Agreement Cover?
- Amount and type of shares
- Vesting criteria
- Vesting schedule
- Company buy back option
- Confidentiality
- Definitions and interpretations
Further information:
View Sample Share Vesting Agreement
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