Are you an employee who owns shares in your company, and you're contemplating resignation? It's crucial to grasp the legal aspects of your shares and what happens to them when you decide to step away from your current position. Employee share ownership can take various forms, including share schemes and share purchases. Your rights and responsibilities concerning these shares are typically outlined in the shareholder agreement. In this article, we'll explore the legal implications of resigning when you already own shares, as well as what happens if you hold share options or contingent offers.
I. Shares You Already Own
In most cases, the shares you currently own are your personal property, independent of your employment status. This means your employer cannot force you to sell your shares back to the company, nor can you compel your employer to purchase them. However, it's important to note that your employer's company constitution or share agreement may contain specific terms regarding employee shares upon resignation. These terms might mandate that you sell back a portion or all of your shares to the company at an agreed-upon value, and these provisions can be legally enforced.
In the absence of such terms, selling your shares may be challenging, especially for employees of smaller proprietary companies. Finding a buyer might prove difficult, leaving you 'stuck' with shares you no longer wish to retain. In this situation, your rights are derived from the Corporations Act 2001 (Cth). It's worth mentioning that this is a complex area of law, often leading to litigation. If you find yourself in this predicament, seeking legal advice is strongly recommended.
II. Share Options and Contingent Offers
Many companies offer employees share options or grants that are contingent on factors like continued employment or the achievement of specific targets in the future. Generally, future interests that hinge on continued employment do not persist post-resignation. However, this principle is governed by contract law, and the specifics can vary significantly depending on your employment contract, other agreements you've entered into, and the circ*mstances of your employment.
Each situation is unique, and understanding the consequences of resigning on your shareholding is vital. If you're uncertain about your specific position, it's advisable to consult with a legal expert to avoid taking actions that might result in a loss of your rights or entitlements.
In summary, the handling of employee shares upon resignation is a multifaceted issue, with implications that can significantly impact your financial interests. The specifics of your situation depend on the terms outlined in your shareholder agreement, employment contract, and company constitution. While you may have ownership rights to your shares, the enforceability of selling them back to the company can vary. Additionally, future interests in shares are typically contingent on your continued employment and can be governed by contract law. Given the complexity of this topic and the potential for legal ramifications, seeking professional legal advice when faced with such a scenario is a wise course of action.
By understanding the legal landscape surrounding your employee shares, you can make informed decisions when considering resignation and ensure that your financial interests are safeguarded.
