Date of grant: Overview, definition, and example
What is the date of grant?
The date of grant refers to the specific date on which a benefit, right, or privilege is officially granted to an individual or entity. This term is commonly used in the context of stock options, employee benefits, or legal agreements, where the date marks the point in time when the rights or obligations under the agreement begin. It is the date when a party becomes entitled to exercise certain rights or when a specific action is formally agreed upon.
For example, in an employee stock option plan, the date of grant is the day on which the employee is granted the right to purchase company stock at a specific price, typically after meeting certain conditions.
Why is the date of grant important?
The date of grant is important because it establishes the starting point for various rights or obligations under a contract or agreement. It is critical in determining when certain terms take effect, when vested rights can be exercised, or when certain obligations must be fulfilled. In many cases, the date of grant helps calculate other key dates, such as vesting schedules, exercise windows, or expiration dates.
For businesses, clearly defining the date of grant ensures clarity and fairness regarding the commencement of rights or responsibilities, reducing the potential for disputes.
Understanding date of grant through an example
Imagine a company offers stock options to an employee as part of their compensation package. The options are granted on January 1st, but the employee cannot exercise them until after a certain period, known as the vesting period. The date of grant in this case is January 1st, marking the beginning of the employee’s right to eventually exercise the options.
In another example, a landlord and tenant agree on a lease where the tenant receives the right to occupy a property on a certain date. The date of grant, in this case, could refer to the specific day the lease is executed and the tenant officially gains the right to take possession of the property.
An example of a date of grant clause
Here’s how a date of grant clause might look in a contract:
“The Date of Grant for the stock options provided under this Agreement shall be [Insert Date]. The rights to exercise these options shall begin as of this date, subject to the terms and conditions set forth herein.”
Conclusion
The date of grant is a key date in various types of agreements, marking the point when rights, privileges, or obligations are formally conferred. It plays an essential role in determining when certain actions can be taken, such as exercising stock options or fulfilling contract terms. By clearly defining the date of grant in agreements, businesses and individuals can ensure that all parties are aligned regarding when specific rights or responsibilities come into effect.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.