Good leaver/Bad leaver definition

Shares may be given to management or employees in order to incentivise them. The purpose of the leaver provisions is to deprive management/employees of those shares if they leave the employment of the relevant company or group. The concept of a leaver encompasses not only typical leaving events such as dismissal and resignation but also deemed events such as death, bankruptcy and divorce. If a leaver’s shares are to be sold, the sale price for those shares will vary depending on whether the leaver is a good leaver or a bad leaver. A 'bad leaver' is an employee/manager who may have resigned from his or her position early into the investment, eg in the first 12 or 24 months, or has been dismissed for misconduct or non-performance. A 'good leaver' is an employee/manager who may have resigned after a long period of service or has become involuntarily incapacitated. 'Bad leavers' will generally be required to sell their shares at the lower of market value and issue price. 'Good leavers' will generally sell at market value.