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Exercise of option for or by nominee

Often, an option will be granted to a specified person or his/her “nominee”. A nominee provision does not give rise to any assignment of the option. It only gives power to the nominee to exercise the option on behalf of the grantee.

Authored by Christopher Conolly, Partner, HWL Ebsworth Lawyers. Updated by the LexisNexis Legal Writer team.

General

Often, an option will be granted to a specified person or his/her “nominee”. A nominee provision does not give rise to any assignment of the option. It only gives power to the nominee to exercise the option on behalf of the grantee.

If an option specifies that it may be exercised by the grantee or by a nominee, the nominee may exercise the option. Practically speaking, the nomination should occur before, or simultaneously with, the exercise of the option. The following is a simple form of notice of nomination:

NOTICE OF NOMINATION
To [Grantor]
TAKE NOTICE that [Grantee] nominates [Nominee] as Nominee for the purpose of exercising the Option granted by you to [Grantee] under the Option Deed dated [date] for the sale of the Property.
The Nominee:
(a) acknowledges that it has read the Option Deed and agrees to be bound by its terms and conditions, and
(b) accepts its nomination as Nominee.
Capitalised words used in this notice have the meaning given to them in the Option Deed.
[signed by Grantee and Nominee (in the presence of witnesses)]

See the nomination clause (cl 5) in the precedent Call option deed.

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