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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