Agreement for the surrender of options

Option agreements don’t always result in all of the options being exercised. There may be times when all or part of the option is surrendered (this may also refer to the options being cancelled or released).

Option surrenders can happen for a number of reasons, for example when the option was granted in error and is then being surrendered by mutual consent, or because the option has lapsed under the terms of the option agreement. Whatever the reason, the company must keep a record of this.

The reason for the surrender will usually be recorded in board minutes. It’s often also advisable to get an agreement for the surrender of options (“Agreement for Surrender'') signed by the company and the relevant option holder. This will specify the number of shares being surrendered, and acts as evidence in the event of any dispute concerning the surrender.

In the event of an option surrender by mutual consent, the Vestd platform automatically generates the Agreement for Surrender for both parties to sign. You can then upload the signed copy to the platform for your records. Board minutes will automatically be stored on Vestd too.

There may be times when it’s not possible to get the Agreement for Surrender signed by the option holder, such as when they are leaving the company on bad terms and refuse to sign it. In this situation, the company may be able to rely solely on board minutes to record the lapse of the option pursuant to the terms of the option agreement.

It is important to note that the Agreement for Surrender must be signed as deeds and therefore must be signed in the presence of an independent witness, who will also sign the document and provide their personal details. Witnesses must be 18+ years of age, not related to the signatory, and not involved in the matter the Agreement for Surrender relates to.

For more information on how Vestd records option surrenders, read our help guide.

Download the Agreement for the surrender of an option