Vesting Agreement (New Zealand)
Header
VESTING AGREEMENT
This Vesting Agreement ("Agreement") is entered into on [Agreement Date] between:
COMPANY: [Company Name], NZBN [Company NZBN], of [Company Address] ("Company"); and
RECIPIENT: [Recipient Name], of [Recipient Address], holding the position of [Recipient Role] ("Recipient").
Background
BACKGROUND
A. The Company is incorporated in New Zealand under the Companies Act 1993 (NZBN: [Company NZBN]).
B. The Recipient is a founder, co-founder, or key employee of the Company whose continued service and commitment are integral to the growth and success of the Company.
C. The Company wishes to incentivise the Recipient's continued involvement with the Company by granting [Total Shares] [Share Class] ("Vesting Shares") on the vesting terms set out in this Agreement.
1. Grant of Vesting Shares
1. GRANT OF VESTING SHARES
1.1 Grant. The Company grants to the Recipient, and the Recipient agrees to subscribe for, [Total Shares] [Share Class] ("Vesting Shares") at an issue price of NZD $[Issue Price] per share, for a total consideration of NZD $[Issue Price] multiplied by [Total Shares], subject to the vesting conditions set out in this Agreement.
1.2 Initial Allotment. All [Total Shares] Vesting Shares shall be allotted to the Recipient promptly after execution of this Agreement and shall be entered into the Company's share register under section 87 of the Companies Act 1993. However, all unvested shares are subject to the Company's buyback right under clause 5.
1.3 Rights. The Vesting Shares shall carry the same voting rights, dividend rights, and other rights as all other [Share Class] in the Company, subject to the restrictions imposed by this Agreement on unvested shares.
1.4 Transfer Restrictions. The Recipient shall not sell, transfer, assign, pledge, or otherwise encumber any Vesting Shares (whether vested or unvested) without the prior written consent of the Company's board of directors, unless such shares have fully vested and no buyback right remains exercisable.
2. Vesting Schedule
2. VESTING SCHEDULE
2.1 Vesting Commencement Date. The vesting period commences on [Vesting Start Date] ("Vesting Commencement Date").
2.2 Cliff. No Vesting Shares shall vest during the first [Cliff Months] months following the Vesting Commencement Date (the "Cliff Period"). On the date that is [Cliff Months] months after the Vesting Commencement Date (the "Cliff Date"), [Cliff Percentage]% of the total Vesting Shares shall vest, provided the Recipient remains continuously engaged with the Company in the capacity of [Recipient Role] (or such other capacity as the board approves in writing) on the Cliff Date.
2.3 Post-Cliff Vesting. Following the Cliff Date, the remaining unvested Vesting Shares shall vest on a [Vesting Frequency] basis over the remainder of the [Vesting Period Years]-year vesting period in equal instalments, subject to the Recipient's continuous engagement with the Company.
2.4 Full Vesting. Subject to the terms of this Agreement, all [Total Shares] Vesting Shares shall have fully vested by the date that is [Vesting Period Years] years after the Vesting Commencement Date (the "Full Vesting Date").
2.5 Continuous Service. For the purposes of this Agreement, "continuous engagement" means the Recipient's uninterrupted service as an employee, director, or contractor of the Company, with approved leave not counting as a break in continuity.
3. Acceleration
3. ACCELERATION ON CHANGE OF CONTROL
3.1 Change of Control. A "Change of Control" means any transaction or series of transactions resulting in a person or group of persons acquiring more than 50% of the voting shares of the Company, or the sale of all or substantially all of the Company's assets, or the Company's listing on a recognised stock exchange.
3.2 Acceleration. The following acceleration applies to unvested Vesting Shares on a Change of Control: [Acceleration Type].
3.3 Single Trigger. If single trigger acceleration applies, all unvested Vesting Shares shall immediately vest on completion of the Change of Control transaction.
3.4 Double Trigger. If double trigger acceleration applies, unvested Vesting Shares shall vest only if, within 12 months following the Change of Control, the Recipient's engagement with the Company (or its successor) is terminated without cause or the Recipient resigns for good reason.
4. Departure
4. DEPARTURE OF RECIPIENT
4.1 Good Leaver. If the Recipient's engagement with the Company ends for reasons outside the Recipient's control (including death, total and permanent disability, or redundancy) (a "Good Leaver"), all unvested Vesting Shares shall vest immediately on the date of departure.
4.2 Bad Leaver. If the Recipient's engagement with the Company ends for any other reason — including resignation, termination for cause, or serious misconduct — (a "Bad Leaver"), all unvested Vesting Shares shall not vest and shall be subject to the Company's buyback right under clause 5.
4.3 Vested Shares on Departure. Shares that have already vested at the time of departure shall remain the Recipient's property and are not subject to the Company's buyback right under clause 5, unless the Recipient is a Bad Leaver and the board determines otherwise in accordance with the Company's constitution.
5. Company Buyback Right
5. COMPANY BUYBACK RIGHT
5.1 Buyback Right. Upon the Recipient becoming a Bad Leaver, the Company has the right (but not the obligation) to buy back all unvested Vesting Shares at the buyback price of [Buyback Price] per share.
5.2 Exercise Period. The Company must exercise its buyback right within [Buyback Period] days of the Recipient's departure by giving written notice to the Recipient.
5.3 Companies Act Compliance. Any buyback of shares shall be effected in compliance with the Companies Act 1993, including section 59 (company may acquire own shares) and the solvency test under section 4.
5.4 Failure to Exercise. If the Company does not exercise its buyback right within the exercise period, the unvested Vesting Shares shall remain the Recipient's property, free of the Company's buyback right.
6. General
6. GENERAL PROVISIONS
6.1 Governing Law. This Agreement is governed by the laws of New Zealand. Each Party submits to the non-exclusive jurisdiction of the courts of [Governing Jurisdiction] for the resolution of all disputes.
6.2 Employment. Nothing in this Agreement creates or implies an employment relationship between the Company and the Recipient. The Recipient's engagement with the Company is governed by a separate employment agreement or contractor agreement.
6.3 Tax. The Recipient acknowledges that the grant, vesting, and any future disposal of Vesting Shares may have income tax and capital gains tax implications under the Income Tax Act 2007 and is advised to obtain independent tax advice. The employee share scheme rules in subpart CE of the Income Tax Act 2007 may apply.
6.4 Entire Agreement. This Agreement constitutes the entire agreement between the Parties regarding the vesting of shares and supersedes all prior agreements and negotiations.
6.5 Amendment. No amendment to this Agreement is effective unless made in writing and signed by both Parties.
6.6 Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original.
Execution
EXECUTION
EXECUTED as an agreement on [Agreement Date].
Director
________________
Signature
Recipient
________________
Signature
What Is a Vesting Agreement (New Zealand)?
A Vesting Agreement in New Zealand records a corporate governance arrangement and the obligations of the company and its officers, consistent with the Companies Act 1993.
In New Zealand, vesting agreements are governed by the Companies Act 1993, which sets out the rules for allotting, transferring, and buying back shares, as well as the requirement to maintain an accurate share register under section 87. The Income Tax Act 2007 — specifically the employee share scheme rules in subpart CE — governs the tax treatment of shares issued under vesting arrangements, and founders and employees should obtain independent tax advice before entering into a vesting agreement.
A standard New Zealand vesting agreement for founders includes a one-year cliff (no shares vest in the first 12 months) followed by monthly or quarterly vesting over the remaining three years, resulting in full vesting after four years of continuous engagement. For key employees (such as the first engineering hire or a head of sales), similar vesting schedules apply, though the total number of shares and the specific terms may differ from founder grants.
The vesting agreement must also address what happens to unvested shares if the recipient leaves the company (whether voluntarily or involuntarily), whether vesting accelerates on a sale of the company or other liquidity event, and the mechanics of the company's right to buy back unvested shares from a departing recipient. These provisions are critical for protecting existing shareholders and confirming that equity remains with the people who are actively contributing to the company's success.
Vesting agreements are standard practice for New Zealand startups raising external capital, as most angel investors and venture capital funds require founder vesting as a condition of investment.
When Do You Need a Vesting Agreement (New Zealand)?
A Vesting Agreement should be used whenever a New Zealand company is granting shares to a founder, co-founder, or key employee on terms that require the shares to be earned over time. Vesting agreements are particularly important in the following situations.
When a startup is being formed with multiple co-founders, each co-founder should have a vesting agreement from day one. This protects the remaining founders and the company if one co-founder decides to leave or reduces their commitment early in the company's life — without vesting, a departing co-founder could walk away with a significant equity stake that permanently dilutes the remaining team.
When a company is raising its first external capital from angel investors or venture capital funds, investors will almost always require that all founders have vesting agreements in place as a condition of the investment. Investors need confidence that the founding team's equity is subject to performance conditions that align their interests with the long-term success of the company.
When a company is bringing on a senior hire — such as a Chief Technology Officer, Head of Product, or General Manager — and wants to grant equity as part of the remuneration package, a vesting agreement confirms that the equity vests over time and is linked to the employee's continued contribution. The vesting agreement should be read alongside the employee's employment agreement under the Employment Relations Act 2000.
When a company is undertaking a restructure or recapitalisation and existing shareholders are having their shares regranted on vesting terms as part of the restructure, a vesting agreement documents the new terms of the equity grant.
From a tax perspective, the timing of the vesting agreement is important: it is generally most tax-efficient to establish vesting at the company's inception, when share values are lowest, rather than retroactively applying vesting conditions to existing high-value shares.
What to Include in Your Vesting Agreement (New Zealand)
A thorough New Zealand Vesting Agreement should include the following key elements.
The parties must be clearly identified: the company (with its NZBN and registered address) and the recipient (with their full name, address, and role in the company).
The share grant must specify the total number of shares being granted, the class of shares, and the issue price per share. The issue price for founder shares is typically a nominal amount (such as NZD $0.001 per share), reflecting the very early stage of the company. The shares should be allotted immediately under the Companies Act 1993, with the unvested portion subject to the company's buyback right.
The vesting schedule must be set out in detail: the vesting commencement date, the total vesting period (typically 4 years), the cliff period (typically 12 months), the percentage of shares vesting at the cliff (typically 25%), and the frequency and amount of post-cliff vesting (typically monthly in equal instalments).
The acceleration provisions must specify what happens on a Change of Control — whether single trigger (all unvested shares vest immediately on the change of control event) or double trigger (vesting accelerates only if the change of control is followed by termination without cause or resignation for good reason).
The departure provisions must distinguish between Good Leavers (who retain their vested shares and may have unvested shares accelerated or retained) and Bad Leavers (who forfeit all unvested shares and are subject to the company's buyback right).
The buyback mechanics must specify the buyback price (issue price, fair market value, or nil) and the period within which the company must exercise its buyback right.
The tax acknowledgment clause must draw the recipient's attention to the employee share scheme rules in subpart CE of the Income Tax Act 2007 and recommend independent tax advice. The forms-legal.com Vesting Agreement (New Zealand) provides a ready-to-use template that meets New Zealand legal requirements.
Cite this page
Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Vesting Agreement (New Zealand) (New Zealand) [Legal document template]. Forms Legal. https://forms-legal.com/new-zealand/business/corporate/vesting-agreement-new-zealand
"Vesting Agreement (New Zealand) (New Zealand)." Forms Legal, 2026, https://forms-legal.com/new-zealand/business/corporate/vesting-agreement-new-zealand.
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title = {Vesting Agreement (New Zealand) (New Zealand)},
year = {2026},
howpublished = {\url{https://forms-legal.com/new-zealand/business/corporate/vesting-agreement-new-zealand}},
note = {Free legal document template. Based on Companies Act 1993}
}Also available for these jurisdictions:
Frequently Asked Questions
Founder vesting is a mechanism by which the shares allocated to founders of a New Zealand company are earned over time, contingent on the founder's continued involvement with the company. Rather than founders receiving all their shares outright on day one, the shares vest gradually — typically over a four-year period with a one-year cliff — incentivising each founder to remain committed to the company and contribute to its growth over the long term. Investor vesting is important for New Zealand startups for several reasons. First, it protects the remaining founders and investors if one founder leaves early: the departing founder gives back their unvested shares, which can be re-granted to a replacement founder or retained as an employee share pool. Second, it is a condition of investment for most angel investors and venture capital funds — investors want assurance that the founding team is committed for the long haul. Third, it aligns each founder's personal incentives with the company's long-term success, reducing the risk of founder conflict and 'free-riding'. Vesting agreements are governed by the Companies Act 1993 for the mechanics of share issuance and buyback, and by the Income Tax Act 2007 for the tax treatment of employee share schemes.
A vesting cliff is a minimum period of continuous service that a founder or employee must complete before any of their shares vest. The most common cliff period is 12 months (one year). During the cliff period, no shares vest — the founder or employee holds the shares but they are all subject to the company's buyback right if the person departs before the cliff date. Once the cliff date is reached (provided the person has maintained continuous engagement with the company), a lump sum of shares vests immediately — typically 25% of the total grant for a four-year vesting schedule with a one-year cliff. After the cliff date, the remaining unvested shares vest on a regular basis (monthly, quarterly, or annually) over the remainder of the vesting period until all shares are fully vested. The cliff protects the company and other founders from a scenario where a co-founder joins and immediately departs with a significant equity stake having contributed minimal value. It also gives the company and investor confidence that the founding team is committed before any equity is permanently earned.
Acceleration provisions determine what happens to unvested shares on a Change of Control — such as the sale of the company, a merger, or an IPO. Single trigger acceleration means that all unvested shares vest immediately upon completion of the Change of Control event, regardless of whether the recipient's employment or engagement with the company is terminated. Single trigger acceleration is more favourable to founders but can make the company less attractive to acquirers, who typically want to retain key team members post-acquisition by keeping some unvested equity as an incentive. Double trigger acceleration is the more common approach preferred by investors and acquirers: unvested shares only accelerate if two events both occur — the Change of Control AND the termination of the recipient's engagement without cause (or resignation for good reason) within a specified period (typically 12 months) following the Change of Control. This structure ensures that if an acquirer wants to retain a founder, they can do so by keeping the unvested equity as a continued incentive, while protecting the founder from being forced out after an acquisition with nothing to show for their continued loyalty.
When a company exercises its buyback right over unvested shares under a New Zealand vesting agreement, it is acquiring its own shares, which is regulated by section 59 of the Companies Act 1993. Section 59 permits a New Zealand company to acquire its own shares provided the acquisition is authorised by the company's constitution or by a special resolution of shareholders, and the company satisfies the solvency test (the company can pay its debts as they fall due and its total assets are not less than its total liabilities, including contingent liabilities, immediately after the acquisition). The Companies Act 1993 also requires that any acquisition of a company's own shares be on arms-length terms if it involves a director or shareholder — a share buyback from a departing founder at nil consideration or at a nominal price must be authorised appropriately. To avoid complications, many New Zealand vesting agreements structure the unvested shares as shares subject to a 'forfeiture' condition rather than a formal buyback, meaning the shares are cancelled or transferred back to the company for minimal consideration on the occurrence of a specified event (such as departure as a Bad Leaver).
The tax implications of a vesting agreement for New Zealand founders and employees are governed primarily by subpart CE of the Income Tax Act 2007, which contains the employee share scheme (ESS) rules. Where shares are issued under an employee share scheme at a discount to market value, the discount element is generally treated as employment income to the recipient, subject to PAYE. However, the ESS rules include several concessions for qualifying schemes, including the ability to defer the taxing point until shares vest or are sold. The key tax events in a typical vesting arrangement are: the grant date (when shares are issued — if shares are issued at a price below market value, there may be an immediate income tax implication); the vesting date (when unvested shares vest — the market value of the shares at this point less the amount paid may be taxable employment income); and the disposal date (when the recipient sells vested shares — any gain may be taxable under the financial arrangements rules or as ordinary income if the shares are held as trading stock). New Zealand does not have a general capital gains tax, but gains from the disposal of shares may be taxable if the shares were acquired with a dominant purpose of resale. Independent tax advice from a New Zealand tax specialist is strongly recommended before establishing a vesting scheme.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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