If certain employees hold the key to the success of your business, ask yourself these questions.

Would the loss of said employee affect the capital value of my business? If yes, what would the capital loss be?

If the capital loss would be significant, do as many thousands of other Australian businesses have done before you, and give them a piece of the pie. You can do this through either an Employee Share Plan Scheme (ESS) or an Employee Share Option Plan (ESOP).

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What is the difference between an option and a share?

An option is an agreement between a company and an employee, where the company promises to provide the employee with shares at a future point in time; typically, only if certain conditions are met (known as vesting conditions). An option does not give the employee the right to receive dividends or partake in shareholder decisions – those rights are afforded to the employee once (and only if) the option converts into shares.

Our team of experienced lawyers have implemented both ESS’s and ESOP’s in a number of businesses in Australia. Working with start-ups and scale-ups, ESOPs are usually their preferred method of bringing their employees along for the journey.

Why? Lets discuss. Lodge an enquiry and we’ll be in touch to book in a free 30-minute consultation with one of our team members.

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How does an option convert into shares?

The process for conversion will be outlined in the company’s ESOP. Generally speaking, the option vests once all the vesting conditions are met, upon which a vesting period commences. The employee has until completion of the vesting period to pay the share price to the company and comply with any other condition attached to the option (such as, to sign an agreement to be bound by the Company’s Shareholders’ Agreement).

What is the tax implication to the employees?

If you grant options or shares to your employees at a discount to market rate, there will likely be tax implications (unless special tax treatment applies). Moral of the story, speak to our team before you enter discussions with your employees.

Tammi and Ben, Lawnch Directors

Lawyers for fast-moving businesses

When your business needs rapid-response insights that come from experience, not theory, we’re who you talk to.

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The Lawnch Difference.

Traditional professional services firm 

Waits for you to tell them what to do

Slow to respond

Poor communicators

Forget the ‘service’ component of ‘customer service’

Provide documents that you don’t understand and hence can’t implement

Prepared agreements/documents hold little to no practical value

Stiff and formal

The Lawnch way

  • Flips the traditional model on its head – by working with you proactively to help you identify what you don’t know
  • Responsiveness – we’re so quick to respond, we’ll be waiting on you
  • Active communicators – who move at the speed you set
  • Customer service – is at the forefront of everything we do
  • Workshop documents with you – so that you understand the implications
  • Align agreements and documents with your strategic goals – for both now and in the future
  • Vibrant and energetic – no suits and frowns here!

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