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Incentive Stock Option Agreement Template for Singapore

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Key Requirements PROMPT example:

Incentive Stock Option Agreement

"I need an Incentive Stock Option Agreement under Singapore law for our Series B startup, granting our CTO 50,000 shares with a 4-year vesting period starting March 2025, including accelerated vesting provisions in case of acquisition."

What is a Incentive Stock Option Agreement?

The Incentive Stock Option Agreement is commonly used by Singapore companies to attract and retain key talent by offering them equity participation in the company's growth. This document is particularly relevant for startups, growth companies, and established corporations looking to align employee interests with company success. The agreement must comply with Singapore's Companies Act, Securities and Futures Act, and relevant tax regulations. It typically includes detailed provisions on vesting schedules, exercise periods, termination scenarios, and tax implications, making it a crucial tool for both employee compensation and corporate governance.

What sections should be included in a Incentive Stock Option Agreement?

1. Parties: Identification of the company and the option holder

2. Background: Context of the option grant and reference to any share option plan

3. Definitions: Key terms used throughout the agreement including Option Price, Exercise Period, Vesting Schedule, etc.

4. Grant of Option: Details of the option including number of shares and exercise price

5. Vesting Schedule: Timeline and conditions for option vesting

6. Exercise Period: Terms and conditions for exercising the option

7. Method of Exercise: Process and requirements for exercising the options

8. Termination Provisions: Treatment of options upon employment termination

9. Transferability: Restrictions on transfer or assignment of options

10. Compliance with Laws: Requirements for compliance with Singapore securities and tax laws

What sections are optional to include in a Incentive Stock Option Agreement?

1. Change of Control Provisions: Special terms and potential acceleration of vesting in case of company sale or merger

2. Lock-up Period: Restrictions on selling shares after exercise, typically for pre-IPO companies

3. Clawback Provisions: Company's right to recover shares in specific circumstances such as misconduct

4. International Provisions: Special terms for option holders in different jurisdictions

What schedules should be included in a Incentive Stock Option Agreement?

1. Schedule 1 - Notice of Exercise: Template form for exercising options

2. Schedule 2 - Vesting Schedule Details: Detailed breakdown of vesting dates and conditions

3. Schedule 3 - Share Option Plan Rules: Reference to or extract of the main plan rules

4. Schedule 4 - Tax Information: Summary of Singapore tax implications and reporting requirements

Authors

Alex Denne

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

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Industries

Companies Act (Cap. 50): Primary corporate legislation governing company operations, share issuance, and corporate governance in Singapore

Securities and Futures Act (Cap. 289): Regulates securities offerings and trading, including employee share schemes and their disclosure requirements

Employment Act (Cap. 91): Framework for employment relationships and employee rights that may affect stock option terms

Central Provident Fund Act: Governs mandatory social security savings system and its implications for employee stock options

Income Tax Act (Cap. 134): Primary legislation governing taxation of stock options and employee share schemes in Singapore

IRAS Stock Option Regulations: Specific tax authority guidelines on the treatment and reporting of employee stock options

Section 13J Income Tax Act: Specific section dealing with tax treatment and qualification criteria for employee share option schemes

SGX Listing Rules: Requirements for listed companies regarding share-based compensation and related disclosures

MAS Guidelines on Share-based Remuneration: Monetary Authority of Singapore's guidelines on structuring and implementing share-based compensation

Companies' Constitution: Company's foundational document that may contain provisions affecting share issuance and option grants

Personal Data Protection Act 2012: Regulations on handling personal data of option holders and related documentation

Competition Act (Cap. 50B): Framework for assessing any anti-competitive implications of employee stock option restrictions

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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