Share Option Agreement – Put Option

Put Option Agreement

CO.CD.05.10

This template Put Option Agreement is made between a Grantor and an Option Holder. The Grantor grants the Option Holder the right (but not the obligation) to exercise an option requiring the Grantor to purchase the Option Holder’s shares in the company within a specified time period and at a specified price. If the option is not exercised within the agreed period, it will lapse.

The template also includes a notice of exercise attached as a schedule to the agreement. In order to exercise the option, the Option Holder must deliver this to the Grantor.

The template assumes that both parties are individuals; however this may be changed if one or both parties are corporate entities. The template also assumes that the consideration for the purchase of the shares by the Grantor will be made in cash and that the granting of the option itself will be made for nominal consideration, e.g £1. No conditions are attached to the exercise of the option; these should be added if required.

The template does not consider the tax and stamp duty implications of the option. HMRC’s website has relevant information and should be considered. Exercising a put option will not of itself attract stamp duty. Stamp duty is payable on stock transfer forms at 0.5% of the value of the consideration for the transfer of the shares. The stock transfer form, as the document that actually transfers the shares, is the document liable for stamp duty. Note that the Grantor will not be able to be registered as the legal owner of the shares until stamped stock transfer forms are presented to the company.

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