The grant and acceptance of an option on Vestd is a legal contract.
When you grant EMI and unapproved options on Vestd, the recipient digitally accepts the option agreement.
To make the option agreement a legally binding contract, there typically needs to be a nominal cash consideration to ensure formal authorisation from both parties.
However, because the cash consideration is a nominal amount (typically £1), the granting company may forget to take payment.
So we've amended the Vestd option agreement to show that a representation (acknowledgement) of the physical payment of nominal consideration has been made:
2.1 The Company hereby grants to the Employee an option to acquire Option Shares, up to the number set out in the Schedule, at the Exercise Price during the Option Period in accordance with the terms of this Agreement (the “Option”). In consideration thereof the Employee agrees to pay the Company £1, the receipt of which is hereby acknowledged.
In plain English, this means that the company acknowledges the payment has been made and the grant and acceptance of the option agreement is proof of this.
Even though the payment hasn't actually been made, the company cannot go back on their acknowledgement and request payment from the option holder, as the option holder is reliant on the initial representation.
This is a legal principle called estoppel law. The party making the promise is estopped (prevented) from enforcing its legal right in the future.
Please note, this only applies to Vestd EMI and unapproved option agreements that have been generated on or after the 24th of April 2023.
Any agreements generated before this date still require the £1 cash consideration to be made.
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