Step 1: Your employee notifies the CEO that they wish to exercise their options
The first step is for your employee to trigger the start of this process of exercising their options by notifying the CEO that they wish to exercise. If they are currently employed, please check clause 8.1(a) and (b) of their Option Agreement to see if they are eligible to exercise. The employee must have vested options at this point.
If the employee is leaving the company, please check clause 8.3 of their Option Agreement to see if they are able to exercise. The employee has 7 days after their last working day to notify the CEO that they wish to exercise their vested options.
Step 2: The company exercises the options on SeedLegals
Now, the company begins the process of exercising options on SeedLegals. Start by clicking ‘Share Options’ within the menu on the left side of the SeedLegals platform, and then scroll right to the bottom of the page and you should see the ‘Option Holder’ section - click ‘Manage’ to access this.
Next, find the relevant option holder who is exercising their options, e.g. Employee A in the example below and click their name.
You will then see the screen below, here is where you go ahead and select ‘ExerciseOptions’
Step 3: Creating your Notice of Exercise
The Notice of Exercise is required for the options to be exercised and the employee to be granted their shares. Simply click on the ‘Create’ button to go ahead and create the document. Now share this with the employee for them to sign - after you have clicked create - a new selection will appear which now allows you to share the document so click that.
When you share this document with your employee, it would be a good time to tell them that they need to transfer money to the company's bank account for the shares. The amount to transfer is the exercise price * number of options being exercised.
Step 4: Convert your employees share options into shares
Next, you will officially create the shares in the company. This is done via an SH01. If you are registered for Companies House's e-filing system, you can forgo this step on SeedLegals and e-file the SH01 online.
If you prefer to post the SH01 to Companies House, then continue below.
Click the create button, then sign the SH01 form by clicking the purple ‘Sign’ icon at the top of the page. Now send the completed SH01 form to Companies House via post to the following address:
Step 5: Click the Exercise the option button under the SH01
This finalises the options exercise and your employee will now be a shareholder on your cap table. You can send your new shareholder their share certificate by clicking on Shares on the left hand side > Share Certificates at the top of the page.
Have the director and a witness sign the certificate, then you can select the certificate and send it to your shareholder's email.
Step 6: Create and circulate a Deed of Adherence.
You now have a new shareholder in your company, which means they should agree and sign onto any existing shareholder agreements you have in place. If you have an existing Shareholders Agreement/SSA, please reach out to us through the chat button and we can provide you a Deed of Adherence template.