The Legal Nature of an Employee Option Programme
An employee stock option programme is not an institution of labour law: the Labour Code regulates only remuneration, while the option itself is a civil-law contract mechanism. Georgia has no separate statute for granting options: the company creates the programme under freedom of contract, and in its relationship with employees this contract is subject to special control — that control is the main theme of this page. United States tax and securities regulation of options does not apply here; the Georgian page builds the programme as a civil contract, while the tax and issuance layer is governed by separate legislation.
A second important circumstance: an option plan is usually drafted in advance by the employer or a group company and offered to employees in standard form. The Civil Code calls such clauses standard terms, and individuals who do not pursue entrepreneurial activity — employees squarely among them — enjoy special protection against them.
Void Standard Terms: Which Clauses Fall
Article 347 of the Civil Code directly provides that, in the standard terms an offeror uses towards individuals who do not pursue entrepreneurial activity, the following are void: a clause making the deadlines for accepting or rejecting the offer, or for performing the work, unduly long or obviously short; a clause making the deadlines for the offeror's own obligations deviate from statutory norms, unduly long or insufficiently defined; a clause giving the offeror the right to refuse performance without justification and without a basis indicated in the contract; a clause entitling the offeror to alter the promised work in a manner unacceptable to the other party; and a clause obliging the other party to pay a reimbursement of costs that is unduly high.
Translated to an option plan, this means: vesting periods and exercise conditions that make the option realistically unusable; unilateral amendment of the plan by the company; refusal to honour an exercise without a stated basis; or non-refundable charges and punitive costs imposed on the employee — each of these clauses is void, and a refusal or amendment resting on them will not survive in court.
Performance by a Third Party and the Transfer of the Claim
In option practice, the grant is often made not by the employer itself but by another group company or a nominee holder. Article 371 of the Code governs: unless the law, the contract or the nature of the obligation implies personal performance by the debtor, the obligation may be performed by a third party; and the creditor may not refuse that performance unless the debtor objects. A share transfer within an option can therefore lawfully be carried out by a group company.
Article 372 completes the picture: where the creditor enforces against an asset belonging to the debtor, any person at risk of losing their right to that asset may satisfy the creditor — and once the third party satisfies the creditor, the claim transfers to that person. This norm matters for structures where the option is performed by an entity whose rights over the asset are under threat.
Alternative Obligation: Cash or Shares
Many plans provide for dual settlement: on exercise, the employee chooses either shares or their cash equivalent. This arrangement is the classic form of the alternative obligation of Article 374: where one of several obligations must be performed, the choice belongs to the debtor, unless the contract, the law or the essence of the obligation provides otherwise. The design point is precise: for the choice to remain with the company, this must be written into the plan expressly; otherwise the choice belongs to the debtor — the granting company — not the employee.
Frequently Asked Questions
Below we summarize the questions most often asked about employee option programmes.
Does Georgia have a separate options law?
No. Options are granted through civil-law contracts; the Labour Code regulates only remuneration. The tax and issuance layer of a plan is governed by separate legislation.
Which clauses of an option plan are void?
Standard-term clauses imposing unduly long or obviously short deadlines on the employee, altering the promised performance unacceptably, allowing refusal without a stated basis, or demanding an unduly high reimbursement — all void.
Can the option be performed by a third party?
Yes: unless personal performance is required, a third party may perform, and the creditor cannot refuse if the debtor does not object. Once that third party satisfies the creditor, the claim transfers to it.
Who chooses — shares or cash?
Under the general rule of alternative obligations, the choice belongs to the debtor. To give the employee the choice, the plan must say so expressly.
How We Help on Legal.ge
On Legal.ge we build option programmes for employers and employees alike: we draft plan texts free of void clauses, audit existing grants, structure the performance mechanism, and fix the shares-or-cash election. Contact us — your programme will be transparent and enforceable for both sides.