Share Vesting Agreement

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 is to be used in a situation where the shares have already been issued to the shareholder and the company would like to impose vesting criteria. An Employee Share Scheme may also be suitable in similar circumstances. Both the Vesting Agreement and Employee Share Plan will involve tax implications. It is highly recommended that you have a lawyer help you when selecting the appropriate legal documents.

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:

• What are Vested Shares?

• Investing in Vesting