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Drafting a SAR agreement

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SME Lawyers

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How does it work?
Our services include a free consultation, a draft document, a revision round, and a final document. We invoice after sending the draft document.

Experience with legal services for entrepreneurs since 2001
Lawyers and legal professionals.Direct contact with a specialist who thinks practically.
Fixed rates.Where possible, clarity regarding costs in advance.
Within 4 hoursWe respond quickly to your request.
  • We worked for, among others:
  • MKBjuristen.nl partner
  • MKBjuristen.nl partner
  • MKBjuristen.nl partner
  • MKBjuristen.nl partner

We worked for, among others:

An incorrect document often provides a false sense of security.
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Mr. Jaime Boogaers
Mr. Jaime Boogaers
Corporate Law
Attorney, 16 years of experience

A SAR scheme is attractive because participants can economically share in value growth without becoming shareholders. However, valuation, vesting, payout, leaver rules, and tax treatment must be regulated precisely

  • For management, employees, key employees, advisors, founders, and scale-ups
  • Attention to starting value, ending value, valuation method, vesting, and payout
  • Good leaver, bad leaver, exit, tax considerations, and no shareholder rights arranged
  • Practically usable as an alternative to stock options or employee participation

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From 99
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Do you already have a document, but are unsure if it is still correct? We check content, risks, and practical usability.

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Is your document outdated, copied, generated with AI, or no longer suitable? We check and adjust the document.

About us

Our expertise in SAR agreements

Our lawyers and in-house counsel assist entrepreneurs, employers, management teams, founders, and scale-ups with SAR agreements, option agreements, participation schemes, shareholders' agreements, and transaction documentation. We examine valuation, vesting, leaver rules, exit, taxation, payout, non-shareholding, and the linkage under employment law.

Custom solutions for your SAR scheme

A SAR scheme for management, employees, advisors, scale-ups, or an exit bonus does not require the same agreements. Therefore, we tailor the SAR agreement to the valuation method, participants, tax treatment, vesting, and exit.

Our facts

  • Active since 2001
  • Lawyers and in-house counsel
  • Experience with corporate law, participations, transactions, and contract law
  • Attention to practical operation, tax interfaces, risks, and enforceability
  • Fixed rates in advance where possible
  • Customization
  • About us
from 99.- per document

Do you already have a document, but are unsure if it is still correct? We check content, risks, and practical usability.

  • Our legal expert spends 0.5 to 1.5 hours on the check
  • Telephone intake with a lawyer
  • Checks on content, risks, and practical usability
  • Attention to liability, payment, and termination
  • Concrete points for improvement and legal advice
  • Delivered within 3 working days, express delivery possible
from 249.- per document

Is your document outdated, copied, generated with AI, or no longer suitable? We check and adjust the document.

  • Our legal expert spends 1.5 to 2.5 hours checking and making adjustments
  • Telephone intake with a lawyer
  • Verification of the existing document
  • Adaptation to your business and working methods
  • Suitable for new services, customers, or risks
  • Delivered within 5 working days, express delivery possible

About us

Our expertise in SAR agreements

Our lawyers and in-house counsel assist entrepreneurs, employers, management teams, founders, and scale-ups with SAR agreements, option agreements, participation schemes, shareholders' agreements, and transaction documentation. We examine valuation, vesting, leaver rules, exit, taxation, payout, non-shareholding, and the linkage under employment law.

Custom solutions for your SAR scheme

A SAR scheme for management, employees, advisors, scale-ups, or an exit bonus does not require the same agreements. Therefore, we tailor the SAR agreement to the valuation method, participants, tax treatment, vesting, and exit.

Our facts

  • Active since 2001
  • Lawyers and in-house counsel
  • Experience with corporate law, participations, transactions, and contract law
  • Attention to practical operation, tax interfaces, risks, and enforceability
  • Fixed rates in advance where possible

Reviews (21)

Sabine

I was spoken to very kindly on the phone. Our industry was taken into account. Our customers respond positively to the clear general terms and conditions.

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The lawyer took the time to explain everything thoroughly. The advice was not only legally sound but also practically feasible in daily practice. The document was flawlessly accepted by our investors.

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We were immediately assigned a dedicated contact person, which worked very well. The corrections were always implemented lightning-fast in the new version. A company that delivers on what it promises on the website.

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The nuances of our business operations were listened to carefully. They immediately recognized where the sensitivities lay within our collaboration. Our business partners were impressed by the professionalism of the contracts.

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The initial analysis of our documents was razor-sharp. The speed with which complex legislative changes were integrated into our document was excellent. The service was professional and personal.

Mustafa

Our questions were taken seriously. They managed to get a stalled negotiation moving again by proposing a clever compromise. Our business partners were impressed by the professionalism of the contracts.

Eline

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Eva

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Nour

The personal touch during the initial meeting was a major plus. Every adjustment we wanted was incorporated seamlessly and legally correctly. Everything was delivered neatly and on time.

Mark

The consultation provided immediate clarity. The price-quality ratio was good. The service was professional and personal.

Anouar

Scheduling the appointment went very smoothly and quickly. The legal language was strict and forceful where necessary, but lenient where possible. It is clear that they have a passion for entrepreneurship.

Isabel

The quick availability of the lawyer was crucial for us. The lawyer really took the time to understand our specific SaaS solution before starting to write. Our customers are responding positively to the clear terms and conditions.

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No waiting times or endless menus; we got someone on the line immediately. They thought along with us not only from a legal perspective but also from a practical one. The quality fully met our expectations.

Stefan

The communication was friendly and professional. The lawyer always maintained an overview, even when the wish list changed in the meantime. The service was professional and personal.

Imane

The start of the collaboration was exceptionally smooth. Delivery was within the agreed timeframe. The final result aligns 100% with our high standards.

Yousra

The intake was not only informative, but we learned a lot right away. Clauses were added that protect us against risks we did not see ourselves. A party that delivers on what it promises on the website.

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I am extremely pleased with the quick and adequate initial response. It is great that complex legal theories were explained with simple practical examples. These documents will undoubtedly save us a lot of headaches in the future.

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Meet our office

Our ContractCheck, simply explained what can all go wrong.

Why MKB Juristen?

Since 2001, we have been active as a no-nonsense legal firm for entrepreneurs. We quickly get to the heart of the matter: with a thorough assessment, clear answers, and a document that works practically.

  • Nationwide coverage
  • First consultation free and without obligation
  • Fixed rates where possible
  • Affordable legal advice from lawyers and legal experts
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First, see how we work

A legal document requires trust. You see immediately who we are, how we help entrepreneurs, and why we do not work with standard templates.

  • You can view our working method before submitting an application
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What you can expect from us

We translate your situation into a legal document that you can actually use. You won't receive a loose template, but a document tailored to your business, agreements, and risks.

  • A clear roadmap: intake, concept, revision round, and final version
  • Practical explanation on how to use the document
  • Legal attention to liability, payment, and termination
  • Where possible, provide clarity in advance regarding price and delivery time
Are you unsure whether you should have the document drafted, checked, or amended?
During the initial consultation, we will determine the sensible course of action together. Afterward, you will know exactly where you stand.

Why customization?

A legal document only works well if it aligns with your business, agreements, risks, and industry. That is why we do not work with a standard generator, but with legal experts who assess your situation.

  • Prepared for your company
  • Telephone consultation included
  • No standard template
  • Review by legal specialists

What do you get?

You will receive a legal document that is practical and aligns with the agreements you wish to make.

  • Draft document or legal review
  • One adjustment round
  • Clear explanation where necessary
  • Fixed price where possible

The founders of MKB Juristen

Our organization consists of several small teams working within various legal fields. Each legal field has its own senior in-house counsel and/or lawyers.

Denian Wielhouwer

Corporate lawyer in corporate law & business expert

Denian Wielhouwer

Annelore Hendriks

Corporate lawyer, corporate law, administrative law

Annelore Hendriks

Ilja van Driel

Corporate law attorney, employment law

Ilja van Driel

Jaime Boogaers

Corporate law, ICT & privacy law, energy law attorney

Jaime Boogaers
Custom choices

Which choices determine the content?

Before drafting a SAR agreement, you make a number of key choices. These choices determine how attractive the arrangement is to the participant and how predictable the costs are for you.

Choice or question Why this matters legally
How is the value determined? Do you opt for a fixed formula (for example, an EBITDA multiple) or for an independent valuation? A formula provides predictability, while a valuation aligns better with the actual market value.
When is payment made? Do you distribute at a fixed time, after a vesting period, or only upon an exit such as the sale of the company? This determines the liquidity pressure on your company.
How does the participant accrue rights? Does the participant accrue rights over time (cliff or spread out) or dependent on achieving objectives? This determines the binding effect.
What applies upon departure? What consequences do you attach to leaving as a good leaver or a bad leaver, and does the participant retain (part of) the rights?
Who bears the valuation risk? Do you set a lower limit or ceiling on the benefit so that costs remain limited, or does the employee share in the increase in value without restriction?
Clauses and provisions

Which components belong in a SAR agreement?

A good SAR agreement clearly defines the number of rights granted, how the underlying value is determined, and when and how payment is made. Below you will find the components that belong in virtually every SAR scheme.

Provision Relevant to Legal point of attention
Grant At the start of the scheme Describes the number of awarded SARs, the award date, and the starting value (base value) on which the subsequent increase in value is calculated.
Valuation method Set in advance Determines how the value of the company or shares is determined upon allocation and payment, for example via a formula, multiple, or independent valuation.
Fortress (structure) Duration of the scheme Specifies the period and conditions under which the rights become unconditional, such as a time-dependent or performance-dependent accrual.
Exercise and payment At the fortress or exit point Regulates when the participant can claim the increase in value in cash and within what timeframe the company pays out.
Good leaver / bad leaver Upon termination of employment Determines what happens to the rights if the participant leaves, depending on the reason for departure.
Amendment and dilution In the event of capital changes Describes how dividend distributions, share issues, or a restructuring that affect the value are handled.
Tax provisions Continuous Specifies that the benefit is taxed as wages and how payroll tax and withholding are processed.
Disputes and applicable law Continuous Determines which law applies and how disputes regarding the valuation are settled.
Use in practice

How do you use this document correctly?

A SAR agreement only works if the arrangement is applied consistently and the valuation remains verifiable. Therefore, follow the steps below.

Situation What should you do? Point of attention
Upon award Have the starting value and the number of rights recorded in writing and signed by both parties Without an established base value, subsequent value appreciation cannot be calculated, leading to disputes.
Upon signing Discuss the tax implications in advance with your participant and, if applicable, the Tax and Customs Administration The benefit is taxed as wages; agreeing in advance prevents unexpected levies.
During the term Document the relevant valuation data and capital changes annually This ensures the valuation remains substantiated and verifiable upon payment.
Upon payment Process the payroll tax correctly and pay out within the agreed timeframe Proper settlement prevents tax reassessment and disputes regarding late payment.
Common mistakes

Common mistakes

Most problems with SAR schemes do not arise at the time of awarding, but years later at the time of payment. Avoid the following common mistakes.

Wrong Consequence Better approach
Do not agree on a fixed valuation method Discussion and possible proceedings regarding the amount of the benefit Establish a clear formula or valuation procedure in advance.
Ignoring tax consequences Unexpected payroll tax and additional assessment for the company and participant Agree on the tax treatment in advance and process the withholding correctly.
No good leaver / bad leaver scheme Departing employee unintentionally retains full entitlements Include clear departure provisions that regulate the consequences for each situation.
Do not regulate dilution Value appreciation is distorted by share issues or dividends Include an adjustment clause for capital changes.
Confusing SAR with real shares Unintended control or shareholder rights Make it explicit that this concerns a monetary claim, not shares.
Risk profile

What is your situation and what do you pay attention to?

The proper structuring of a SAR agreement depends on your situation and objective. If you recognize yourself in one of the situations below, please pay attention to the mentioned point.

Risk profile Example Focus in the document
Binding key employees You want to retain an important employee at your company for longer Choose a fortress period that matches the desired bond duration.
Working towards sales You want management to share in the event of a future exit Link the payout to the exit moment and the realized selling price.
Do not want to issue shares You want to reward without changing control or share structure Emphasize the purely monetary nature of the SAR.
Keeping costs under control You want to prevent the benefit from increasing uncontrollably Consider a ceiling or a fixed valuation formula.
Additional documents

When is this document not enough?

A SAR agreement governs the remuneration of an individual participant. In a number of situations, you require additional or different documents.

Situation Supplementary document Why
You want to give the employee real shares Shareholders' Agreement When issuing actual shares, you record the mutual agreements between shareholders.
You reward a manager via a separate management structure Management Agreement In this, you define the assignment and remuneration of the manager or management company.
The participant gains access to confidential information Confidentiality Agreement This protects business-sensitive data viewed by the participant in this role.
Explanation of this document

Drafting a SAR agreement, why?

Not every entrepreneur knows exactly what SAR agreements are, when they are needed, and which risks they must cover. Therefore, we explain below what this document entails, what to look out for, and why customized legal solutions are important.

What is a SAR agreement?
A SAR agreement — Stock Appreciation Rights Agreement — is an agreement whereby an employee or management acquires the right to a cash payment equal to the increase in value of a specific number of notional shares in the company during a fixed period. SARs provide the holder with the economic increase in share value without them actually becoming a shareholder. SARs are popular as an alternative to stock options among SMEs where shareholders do not want actual dilution but do wish to allow management or key employees to share in the value creation. The SAR agreement regulates the number of SARs, the reference value at issuance, the establishment period, the exercise modalities, and the basis for payment. Our lawyers will draft a SAR agreement for you that watertight establishes the valuation methodology, correctly defines the establishment period, formulates the good leaver/bad leaver arrangement, and correctly addresses the tax treatment as salary.
How do you establish the valuation methodology in a watertight manner?
The valuation methodology is the most critical provision of the SAR agreement. The SAR holder is entitled to the appreciation in value of the notional shares between issuance and exercise. If the valuation at exercise is not contractually established, the calculation of the payout can lead to serious disputes: which valuation method applies, who performs the valuation, and how are disputes regarding the outcome settled? Your SAR agreement must precisely define the valuation methodology—discounted cash flow, EBITDA multiple, or a combination—the reference period, and the procedure for an independent auditor's report. Our lawyers draft a valuation clause that is transparent and enforceable for both parties.
How do you arrange the good leaver/bad leaver determination?
The good leaver/bad leaver arrangement determines what happens to SARs when the employee leaves the company. A good leaver — someone leaving due to illness, retirement, redundancy, or by mutual request — retains their accrued SARs and can exercise them at the agreed time. A bad leaver — someone who resigns or is dismissed for misconduct — loses their unconfirmed SARs and may receive a lower benefit on the confirmed SARs. Your SAR agreement must explicitly define the good and bad leaver categories and specify the consequences for each category. Our lawyers draft a good leaver/bad leaver arrangement that is fair and stands up in court.
How does it work at MKBjuristen?
After a brief intake, our lawyers draft a SAR agreement that watertight establishes the valuation methodology, correctly describes the establishment period, formulates the good leaver/bad leaver arrangement, and correctly addresses the tax treatment as salary.
Are you unsure whether your document is legally correct? We would be happy to assess the sensible course of action: drafting, reviewing, or amending.
Request a quote

Why not use a standard document?

A standard document often seems like a quick solution, but usually does not fully align with your company, agreements, risks, and way of working. Our legal experts draft documents that fit your situation.

Standard document
SME Lawyers
Not tailored to your business
Tailored to your company, industry, and working methods
No control over your specific situation
Consultation with a lawyer and assessment of your risks
Possibly outdated or incomplete
Verification of current and practical provisions
No personal explanation
Explanation regarding the use of the document

A standard document seems cheap, until it doesn't fit your situation properly. That is why we provide custom legal solutions tailored to your business.

Customization per SAR scheme

Not every SAR scheme has the same objective. Therefore, we do not make SAR agreements generic, but tailored to compensation, retention, value development, and exit.

Management incentive

Focus on value development, targets, vesting, leaver rules, and exit.

Employee scheme

Focus on payroll tax, employment conditions, relocation, departure, and communication.

Scale-up SAR

Focus on investment rounds, dilution, valuation, cash settlement, and exit.

Exit bonus

Attention to change of control, transaction price, corrections, and payment timing.

Advisor or consultant

Attention to performance, term, confidentiality, tax position, and expiration.

Phantom shares

Attention to no shareholding, no voting rights, cash claim, and valuation.


A SAR agreement must make value growth objective and affordable without creating shareholding. Therefore, we look at start-up value, end-value, vesting, leaver rules, exit, tax treatment, and payout.

Common mistakes in SAR agreements

SAR schemes often go wrong because valuation and payment are not documented sufficiently objectively.

  • Making the starting value, ending value, and valuation method insufficiently concrete
  • Failure to clearly regulate fortress, cliff, targets, and forfeiture of rights
  • Good leaver, bad leaver, illness, death and forgetting dismissal
  • Failure to make clear that no shareholder rights arise
  • Underestimating tax treatment, payroll tax, and withholding obligation
  • Define exit, asset deal, share deal, and restructuring too narrowly
  • Do not adjust dividend, new shares, and reorganization in valuation
  • Do not include expert witness provisions for valuation disputes

Draft your SAR agreement properly and avoid unnecessary problems in the future. Good agreements prevent disputes regarding valuation, vesting, departure, exit, taxation, and payout.

What is a SAR agreement?

An agreement for Stock Appreciation Rights whereby someone becomes entitled to a cash payout based on appreciation.

Does a SAR participant receive shares?

No, usually not. A SAR is typically a cash arrangement without shareholder rights.

What is the difference between SAR and an option?

An option grants the right to acquire shares; a SAR usually grants the right to cash upon an increase in value.

How is the value determined?

This must be stipulated in the agreement via a formula, reference date, transaction price, or expert.

Can MKB Juristen review an existing SAR agreement?

Yes. We audit valuation, vesting, leaver rules, exit, taxation, and payout, among other things.

Contact us

Annelore Hendriks

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SME Lawyers at the Chamber of Commerce Source: Chamber of Commerce 2019
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