Exercise of Options

Options over unissued shares in a company can be ‘exercised’ – ie, ‘converted’ into the shares – by paying up the exercise price. For us that is 12¢ per share.

To exercise options the following procedure must be followed:

  • Receive from the optionholder a completed/signed Notice of Exercise of Options and cheque for the aggregate exercise price payable (ie, ___ options @ 12¢ each)
  • Deposit the cheque and wait for clearance from the bank (an alternative would be to organise a direct credit/transfer)
  • Convene a board meeting – or send out a Circulating Directors’ Resolution – to approve the allotment of shares for options to be exercised
  • Send the completed Notice to the share registry
  • The share registry will issue the new shares and send out a Holding Statement, plus adjust the Shares and Options Registers as applicable
  • Prepare and lodge Appendix 3B with the ASX to have the new shares listed
  • If the options were not issued through a prospectus, then prepare and lodge a ‘Cleansing Notice’ with ASX pursuant to Section 708A of the Corporations Act
  • If the option/share holder is a director then prepare and lodge Appendix 3Y with the ASX
  • If the exercise triggers the substantial shareholding requirements, the shareholder must prepare and lodge Form 603 (or 604) with the company and a copy with ASX
  • Prepare and lodge Form 484 with ASIC to update their records.

*Originally written by Company Secretary, an Australian virtual company secretary service.