{"id":2660,"date":"2022-04-13T04:53:51","date_gmt":"2022-04-13T03:53:51","guid":{"rendered":"https:\/\/uk.legalvision.com.au\/?p=2660"},"modified":"2023-04-19T23:59:11","modified_gmt":"2023-04-19T22:59:11","slug":"startup-use-options-pool","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/startups\/startup-use-options-pool\/","title":{"rendered":"How Can My Startup Use an Options Pool?"},"content":{"rendered":"\n

If you are running a startup, it may be in your interest to use an options pool<\/a>. An options pool helps you retain the best talent within your employees and incentivise your workforce to be productive. Managing your employees and keeping them motivated is highly important in developing a strong culture<\/span>. This culture will help to define your business in the long run. This article will outline what an options pool is and some of the pros and cons of using one<\/a>.<\/span><\/p>\n\n\n\n

What is an Option?<\/h2>\n\n\n\n

An option is the right to exercise a choice in the future. This is different to shares<\/span>. A share is usually vested in the person (or company) straight away.<\/span><\/p>\n\n\n\n

When someone is granted an option for shares, it means that at some determined point in the future, that person<\/span> can exercise their right to buy those shares. <\/span><\/p>\n\n\n\n

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For example, suppose a person has an option to buy shares three years from the 28th of February 2022. This means they will have the ability to choose whether to buy those shares on the 28th of February 2025.<\/span><\/p>\n

In the context of an options pool, the share price is the share value from when the option was granted. Therefore, this person can buy those shares in 2025 for their price in 2022.<\/span><\/p>\n<\/div>\n\n\n\n

What is an Options Pool?<\/h2>\n\n\n\n

An options pool is where you reserve a portion of the shares in your company. You will keep this portion aside to issue to certain people as an option. Typically, this is made for the benefit of the employees of a firm. However, you can also give options to long-term non-employees such as consultants and advisors. <\/span><\/p>\n\n\n\n

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Importantly, if your company sets up an options pool, you do not need to issue all options then and there. Instead, you can wait until the right time to decide who to give the options to. <\/span><\/p>\n<\/div>\n\n\n\n

In addition, if a person has an option rather than shares, they will not have the rights that come with shares. For example, they will not vote at shareholder meetings nor have a right to any dividends that you issue. <\/span><\/p>\n\n\n\n

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In an options pool, you may want to make it so that employees can only exercise the option if they meet certain conditions. These are called vesting conditions and commonly relate to their performance (or the company’s).<\/span><\/p>\n<\/div>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

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