Shareholders’ Resolution to Adopt Share Option Plan Template

A Shareholders’ Resolution to Adopt Share Option Plan is a resolution by the shareholders of a company to approve the adoption of an Employee Share Option Plan (ESOP).

When a company decides to incentivise or reward its employees for their contributions to the company by giving them an option to purchase the company’s shares (share options or stock options). They will create a Employee Share Option Plan (ESOP) to lay out the terms and conditions under which they can award an employee such share options. The Board of Directors of the company first approves the plan (ESOP). Subsequently, the Shareholders of the company approve and adopt the plan. This adoption by shareholders happens through a Shareholder’s Resolution to Adopt Share Option Plan.

What is a Shareholders’ Resolution to Adopt Share Option Plan?

This is a resolution by the shareholders of a company to approve the adoption of an Employee Share Option Plan (ESOP).

When do you use a Shareholders’ Resolution to Adopt Share Option Plan?

When a company decides to incentivise its employees by allowing their participation in stock options or share options, it creates a Employee Share Option Plan (ESOP). Essentially, this is to lay out the terms and conditions under which an employee can get such share options. Also,  what such share options will constitute. The Board of Directors of the company plan (ESOP) first approves and then presents to the shareholders for their approval. The Shareholders of the company then give the final approval to the Plan to be adopted by the company. This approval and adoption by the shareholders are made effective through a Shareholder’s Resolution, which is when this document is used.

How to use a Shareholders’ Resolution to Adopt Share Option Plan?

There are two options:

• if a general meeting (i.e. a meeting of shareholders) is convened to make this decision, use a Minutes of a General Meeting to Adopt Share Option Plan; or
• if the company has only one shareholder or the shareholders choose to pass the resolution by way of a written resolution, use a Written Resolution to Adopt Share Option Plan.

What to include in the resolution?

• Details of the meeting (if using Minutes);
• Date of passing the resolution;
• Purpose of the share option plan;
• Class of shares to be issued under the plan;
• Eligible grantees;
• Maximum number of shares issuable upon exercise of all options; and
• Validity of the share option plan.

Notes on signing

• The Minutes of a General Meeting to Adopt Share Option Plan should be signed by the chairperson of the meeting.
• The Written Resolution to Adopt Share Option Plan should be signed by all the shareholders. 

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Along with this document, make sure you see these other templates in our library:

• Shareholder Agreement
• Option Agreement
• Employee Option Repurchase Agreement
• Share Appreciation Rights Plan
• Share Option Plan

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