Shareholder Option


Before Signing …

Have you been offered shareholder options in a start-up and are about to sign the agreement? Before signing the document, you should get legal advice from an expert in business law and commercial experience.

Protecting Your Business Interests

A business lawyer will have a look at the shareholders agreement and any document that needs to be signed. Your lawyer will likely advise you not to sign any document that looks untidy, unprofessional or containing any wording that might compromise your business interests.

Clarity In The Narrative

For instance, there’s a fundamental distinction between transferring shares, subscribing for shares, and being granted an option for shares. There needs to be clarity in the narrative, prior to signing the document.

Transfer, Subscription and Option

The transfer of shares is exactly that – transferring shares from one shareholder to another. Subscription of shares means that you will be issued new shares. An option is how a company will act, to either transfer or share issue.

Untangling Terminology

If the document you are given clearly states that the share is a transfer, then this terminology needs to be consistent throughout the document. If the document states that it is a transfer but in another paragraph the ‘transfer’ is referred to as an ‘option’, then the document needs to be thoroughly reviewed and amended.

If you would like clarity on a shareholders agreement or a share certificate, please get in touch for an informal discussion. We will help you understand what you are being offered and how you can protect your business interests. SG

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