Option plans for a Cyprus startup in Ekvi: grants, vesting, IFRS 2 and exit

A Cyprus company has no statutory option scheme to follow. Cap. 113 contains no provision on the vesting, expiry or forfeiture of employee options, so the plan is a matter of the plan rules and each grant letter. What the Law does say bears on options in one place: the shares issued when an option is exercised cannot be issued below nominal value (s.56). This guide shows how a startup records a plan in Ekvi and what each part produces.

The plan, grants and the pool

A plan is adopted with a pool of options, and each grant draws on the pool: holder, quantity, grant date, strike, expiry and vesting terms. Ekvi shows the pool, the granted, vested, exercised and remaining options, and the fully diluted table that includes them, on any date. Options are not shares and are not entered in the Register of Members; they appear in the fully diluted view until they are exercised and shares are allotted.

Vesting

Ekvi supports three vesting shapes: all at once on the start date, all at the end of the cliff, or a cliff followed by monthly straight-line vesting to the end of the term. Vesting counts full calendar months from the vesting start, which defaults to the grant date. The rounding rule is named and single: vested = the whole-number floor of quantity × months elapsed ÷ vesting months, so no half options exist and nothing is rounded up before it is earned. The remainder vests in the last month.

Example: 4,800 options, 48 months, 12-month cliff, vesting start 1 March 2026. On 1 March 2027 the cliff vests 1,200 options; on 1 September 2027, at 18 months, 1,800 are vested. Options cancelled on a leaver never vest beyond the cancellation.

Exercise is checked against what has vested: an exercise beyond the vested quantity is refused. Expiry is worked out from the grant's expiry date, which is a term of the grant and not an event; no corporate act is required by law.

Strike and nominal value

The strike is recorded with the grant. If it is below the nominal value of the class of shares, Ekvi refuses the grant at the time it is entered, so the error does not surface years later at exercise. Nominal value is mandatory for every share class, because Cap. 113 knows no shares without a fixed nominal amount (s.4(4)). Cap. 113 does not require a strike at or above market value; Ekvi records a grant that has no valuation on its date and names the gap instead of inventing a value.

IFRS 2 schedules

For equity-settled options, Ekvi produces an IFRS 2 expense report for a period. The fair value per option is recorded once, at grant date, and is not remeasured. Each vesting tranche is treated as a separate award and expensed on a straight-line basis by calendar days from the start to its vesting date. Where options are cancelled before vesting, the expense already recognised on the unvested part is reversed in the period of cancellation; vested options that later lapse are not reversed. A grant without a fair value appears as a line with no amount and a status that says why, "no valuation on the grant date" or "fair value to be recorded". It is excluded from the total, and the report says how many lines are excluded. Amounts are rounded once, to the cent, at a named step. Whether and how your auditor applies IFRS 2 to your plan is for the auditor and the company.

The exit waterfall

When a term sheet or an offer arrives, the waterfall shows who gets what at an exit value you choose. Preferred classes with a liquidation preference are paid by seniority, highest first. A non-participating class takes its preference or converts to ordinary shares, whichever pays more, and Ekvi finds the stable set of conversions. A participating class takes its preference plus a share of the rest, up to a cap if the term sheet has one. Options are counted cashlessly. The rest is shared pro rata, to the cent with remainders given to the largest fractions. Ekvi shows the result per holder; it does not decide what the term sheet means.

Employees see their own

Each employee's page shows their own shares and grants and how much has vested on a date they choose, and an equity statement as a PDF. They see nothing of other holders.

What this guide does not cover

How options are taxed, for the company and for the employee, is not covered here and must be taken from an adviser.

Ekvi is a record-keeping tool and does not provide legal or tax advice.