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Share Vesting Agreement Template for Malaysia

A Share Vesting Agreement under Malaysian law is a legal document that establishes the terms and conditions under which company shares are granted to an employee or contractor, with ownership rights that vest over time or upon meeting specific conditions. The agreement complies with the Malaysian Companies Act 2016 and relevant securities regulations, detailing the vesting schedule, conditions for acceleration or forfeiture, transfer restrictions, and tax implications. It serves as a crucial tool for companies in Malaysia to align long-term interests of key personnel with company objectives while ensuring compliance with local corporate and securities laws.

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What is a Share Vesting Agreement?

Share Vesting Agreements are essential instruments in Malaysian corporate practice, particularly for companies seeking to attract and retain talent through equity compensation. This Share Vesting Agreement template is designed to comply with Malaysian law, including the Companies Act 2016 and Capital Markets and Services Act 2007, and is typically used when companies want to grant shares to employees or contractors while ensuring their long-term commitment. The document includes comprehensive provisions for vesting schedules, performance conditions, clawback mechanisms, and tax considerations. It's particularly relevant for startups, technology companies, and growing businesses in Malaysia that want to implement employee share ownership programs while protecting company interests through gradual vesting periods.

What sections should be included in a Share Vesting Agreement?

1. Parties: Identification of the company and the share recipient (typically an employee or consultant)

2. Background: Context of the agreement, including the company's share scheme and the recipient's relationship with the company

3. Definitions: Definitions of key terms used throughout the agreement, including Vesting Period, Vesting Date, Shares, etc.

4. Grant of Shares: Details of the total number of shares subject to vesting and their class

5. Vesting Schedule: The specific timeline and conditions under which shares will vest

6. Vesting Conditions: Performance metrics, time-based conditions, or other requirements for vesting

7. Transfer Restrictions: Limitations on the transfer of unvested and vested shares

8. Termination of Employment: Impact of employment termination on vesting rights

9. Company's Right of Repurchase: Terms under which the company can repurchase unvested or vested shares

10. Tax Provisions: Tax obligations and responsibilities of both parties

11. Confidentiality: Obligations to keep the agreement and its terms confidential

12. General Provisions: Standard contractual terms including governing law, notices, and amendments

What sections are optional to include in a Share Vesting Agreement?

1. Change of Control Provisions: Accelerated vesting provisions in case of company sale or merger

2. IPO Provisions: Special terms that apply in case of an initial public offering

3. Shareholder Rights: Voting rights, dividend rights, and other shareholder privileges

4. Tag-Along Rights: Right to join in sale of shares by major shareholders

5. Drag-Along Rights: Obligation to join in sale of shares when required by major shareholders

6. Bad Leaver Provisions: Special terms for termination due to misconduct or breach

7. Dispute Resolution: Specific procedures for resolving disputes, including arbitration provisions

What schedules should be included in a Share Vesting Agreement?

1. Schedule 1 - Vesting Schedule: Detailed breakdown of vesting dates and percentages

2. Schedule 2 - Share Details: Specific information about the shares including class, rights, and restrictions

3. Schedule 3 - Performance Metrics: Detailed description of any performance-based vesting conditions

4. Schedule 4 - Notice Forms: Template forms for exercise notices, transfer notices, etc.

5. Schedule 5 - Shareholders' Agreement: Copy or relevant excerpts of the company's shareholders' agreement

6. Appendix A - Company Constitution: Relevant excerpts from the company's constitution regarding share transfers and rights

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Malaysia

Publisher

Ƶ

Document Type

Stock Agreement

Cost

Free to use

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