A share option agreement gives someone the chance to buy shares in a company at a set price in the future. It’s a way to offer potential ownership, often as a reward for work, loyalty, or investment, without giving away shares right away.
Companies use this kind of agreement to attract talented, motivated team members or thank people who help the business grow.
A share agreement is a written deal between a company and a person — often an employee, advisor, or investor. It doesn’t hand over shares right away. Instead, it gives the person the right to buy company shares later, usually at today’s price.
The agreement explains how many shares they can buy, when they can buy them, how much they’ll pay, and what happens if they leave the company before earning the full amount.
When Do I Need a Share Option Agreement?
There are many cases where this agreement makes sense.
Common situations
A company owner wants to reward a top-performing employee with future equity;
A contractor wants equity instead of full cash payment;
A start-up promises shares to co-founders over time;
An investor wants the chance to buy more shares in a few years;
You’re bringing on an advisor and want to offer ownership down the line;
You want to encourage team members to stay longer by offering future shares.
In all these cases, the agreement sets clear rules so everyone knows what to expect.
What Should a Share Option Agreement Include?
A well-drafted share option agreement includes these important details:
The full names of the company and the person getting the shares;
The total number of shares covered by the agreement;
The fixed price per share;
The vesting schedule — this explains when the shares become available to buy;
Any conditions that must be met, such as staying with the company or hitting goals;
The expiration date — when the option ends if unused;
Signatures.
How Can I Create a Share Option Agreement?
You don’t need to hire a lawyer to draft this kind of document. Just use the share option agreement template and fill in the required information:
Name the company and the individual. Include addresses and registration numbers, if relevant.
Write out the total number and type of shares.
List the fixed amount the person must pay if they decide to buy the shares later. This price won’t change, even if the company’s value grows.
Explain when and how shares become available. A common option is monthly vesting over four years, starting after the person stays with the company for one year.
If there are special conditions, such as needing board approval or continuing in a certain role, make sure those are written clearly.
State when the right to buy shares ends (for example, 10 years from the agreement date or 90 days after leaving the company).
Both parties must sign the document to make it official. A company officer usually signs on behalf of the business.
