Given that every company will manage these issues differently, the Vestd platform provides significant flexibility to allow companies to digitally vest and exercise their options, including dealing with employees who leave.
When an option is issued, it has an associated vesting schedule. This can either be that the options all vest at the same time, or in tranches.
When a vesting date has passed (whether tranche or whole vesting), the company is contacted to confirm that the vesting should happen.
This is done digitally via the platform, can be in whole or in part for the relevant options, and the recipient is informed accordingly.
In addition, if the option agreement allows it, the company has the ability to accelerate the vesting if it so wishes (or indeed reverse vesting that has already occurred).
This means, that in the case of someone leaving the company, their options can be set to allow any specific number to be vested as determined between the company and the individual.
Options can be cancelled by the company on the platform, according to the terms of the agreement. This cancels all options that have not yet vested, and the recipient will be notified of the cancellation.
In the instance of someone leaving the company, therefore, if all their options are to be cancelled (whether vested or not), the company needs to roll back their vesting first, then cancel the options.
The platform allows the recipient to exercise all options that have vested and are exercisable.
If options are “exit only”, it is also possible for the company to switch them to exercisable, so long as that is covered by the terms of the agreement.
The recipient chooses via their portal how many of their exercisable options to exercise, and can see what that will cost. The company is informed of this by the platform. The company then confirms via the platform that they have received the relevant funds and the exercise process can go ahead.
The exercise process automates the production of the SH01 and sending it to Companies House, as well as the generation of a share certificate to be sent to the designated Directors to sign via docusign. In addition the relevant options in the recipient and company portal are turned into shares, and the cap table is updated accordingly with the new shareholder.
If relevant, the company is reminded that an ITEPA 431 election may be required at this point. This needs to be completed off platform.