The question that decides everything here is whether the pool is created **before** or **after** a financing round. A pool carved out pre-money dilutes only the existing shareholders; one created post-money dilutes everyone including the incoming investor. Investors know this. Founders frequently discover it after the term sheet is signed.
Option Pool
Creation, top-up and cap table effect
The question that decides everything here is whether the pool is created before or after a financing round. A pool carved out pre-money dilutes only the existing shareholders; one created post-money dilutes everyone including the incoming investor. Investors know this. Founders frequently discover it after the term sheet is signed.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], UEN [UEN] |
| Scheme | [SCHEME NAME] |
| Existing pool | [NUMBER] shares |
| Granted to date | [NUMBER] |
| Exercised to date | [NUMBER] |
| Lapsed and returned to the pool | [NUMBER] |
| Available for grant | [NUMBER] |
| Proposed increase | [NUMBER] shares |
| Pool after increase | [NUMBER] shares, [PERCENTAGE] fully diluted |
| Pre-money or post-money? | [Pre-money — dilutes existing holders only / Post-money — dilutes everyone] |
| Approval required | [Members’ ordinary resolution / Investor consent under the shareholders’ agreement] |
| Approved on | [DATE] |
1. Sizing the Pool
| Stage | Typical pool, fully diluted | What it needs to cover |
|---|---|---|
| Pre-seed / founding | [5–10] per cent | First few hires; advisers |
| Seed | [10–15] per cent | Early team through to the next round |
| Series A | [10–15] per cent | Senior hires; refresh grants for existing team |
| Later rounds | [Top up to cover the next 18–24 months] | Executive hires; retention refreshes |
| — | These are indicative ranges, not rules — a commercial decision; specify | — |
1.1Size the pool against a hiring plan, not a percentage. List the roles to be filled before the next round, the grant each would need, and add a margin for refreshes and for grants already promised but not documented.
1.2A pool sized too large dilutes founders unnecessarily and leaves unallocated shares that investors will treat as issued in any event. Too small and the company runs out mid-round and has to seek approval at the worst moment.
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These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
An investor requiring a pool top-up inside the pre-money capitalisation shifts the entire dilution onto existing shareholders. The investor’s percentage is unchanged whatever the pool size, which is why they have no reason to keep it small. Negotiating a smaller pool, or a post-money allocation, is frequently worth more than an equivalent argument about valuation.
Pick the roles to be filled before the next round, attach a grant to each, add refreshes and undocumented promises, and total it. A percentage plucked from convention either over-dilutes or runs out. If the plan cannot justify the number, the number is wrong.
Investors treat authorised-but-ungranted shares as issued. Founders modelling their position without it consistently overstate what they hold. Section 5 lists what belongs in the fully diluted number, and the ungranted pool is the line most often missing.
Grants agreed in a hiring conversation or an offer letter, and never documented, are real commitments that will surface in diligence and must be honoured. Annexure C exists to make them visible before the pool is sized, not after it is exhausted.
Where forfeited shares return, the pool self-replenishes and needs topping up less often. Where they do not, the pool depletes permanently with every leaver. The scheme rules should say which applies, and limb (c) of the resolution assumes return — confirm that matches the rules.
Employees holding options see their percentage fall when the pool grows, exactly as shareholders do. They are rarely told. Check 8 prompts the explanation; it is better given proactively than discovered at an exit.
Pool increases are almost always a reserved matter under a shareholders’ agreement. A resolution validly passed under the constitution can still breach the agreement. Obtain the consent in writing before the resolution, not after.
Where preference shares carry anti-dilution protection, a pool increase combined with a new issue can trigger adjustments that further dilute ordinary holders. Model it before approving, because the arithmetic frequently changes what the round actually delivers to founders.
A private company is limited to fifty members, excluding employees and former employees who acquired shares while employed and continue to hold. A large pool fully exercised across a broad population should be modelled against that limit before it becomes a live problem.
Multiple spreadsheets held by the founder, the CFO and the investor drift apart within months. Maintain one, reconcile it to the register of members maintained by the Registrar, and update it on every allotment and exercise rather than before a financing.
An employee three years in, fully vested, has nothing further to earn. Refresh grants are what retain people past the original vesting period, and pools sized only for new hires run dry precisely when the team the company most wants to keep needs them.
Granting options over shares not authorised under the scheme creates commitments the company cannot lawfully satisfy without a further approval it may not obtain. Track availability continuously using Annexure B rather than checking at grant time.
A promise of "one per cent" is a moving target that grows more expensive with every issue and creates disputes about the measurement date. Grant a fixed number of shares and explain what percentage it represents today.
Pool percentage, availability and the effect of outstanding convertibles all change with each financing. The cap table should be rebuilt after closing, not carried forward with the round bolted on.
Reflects Singapore practice current as of {{DATE OF USE}}. Approval requirements under the Companies Act 1967, the private company member limit, and the tax treatment of equity awards all change — have any pool increase reviewed alongside the shareholders’ agreement by a corporate lawyer, and model the dilution before agreeing a term sheet.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.