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Restricted Stock Agreement for United Arab Emirates

Restricted Stock Agreement Template for United Arab Emirates

A Restricted Stock Agreement under UAE law is a legal document that governs the issuance of company shares to employees or other stakeholders subject to certain restrictions and vesting conditions. The agreement operates within the framework of UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and must comply with Securities and Commodities Authority regulations. It details the terms of share grants, vesting schedules, transfer restrictions, and forfeiture provisions while addressing specific UAE corporate governance requirements and local regulatory considerations.

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What is a Restricted Stock Agreement?

The Restricted Stock Agreement is a crucial document used by UAE companies to grant equity ownership to key employees or stakeholders while maintaining certain controls over the shares. This agreement type is particularly relevant in the context of employee retention, performance incentivization, and alignment of interests between the company and its key personnel. Under UAE law, particularly Federal Law No. 32 of 2021 and relevant securities regulations, such agreements must carefully balance corporate governance requirements with shareholder rights. The document typically includes detailed provisions on vesting schedules, transfer restrictions, forfeiture conditions, and compliance with local regulations, while also addressing specific considerations for UAE-based companies, such as free zone regulations where applicable.

What sections should be included in a Restricted Stock Agreement?

1. Parties: Identification of the company issuing the restricted stock and the recipient/grantee

2. Background: Context of the restricted stock grant, including reference to any equity incentive plan

3. Definitions: Key terms used throughout the agreement including 'Restricted Stock', 'Vesting Period', 'Vesting Date', etc.

4. Grant of Restricted Stock: Details of the stock grant including number of shares, par value, and grant date

5. Purchase Price: Specification of any purchase price for the restricted stock, including payment terms

6. Vesting Provisions: Detailed vesting schedule, conditions, and requirements for the shares to vest

7. Transfer Restrictions: Limitations on transfer of unvested shares and any lock-up periods

8. Forfeiture Conditions: Circumstances under which unvested shares may be forfeited

9. Rights as a Shareholder: Voting rights, dividend rights, and other shareholder privileges

10. Tax Matters: Tax obligations and responsibilities of both parties

11. Compliance with Laws: Adherence to UAE corporate and securities laws

12. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant courts

What sections are optional to include in a Restricted Stock Agreement?

1. Employment Relationship: Required if the grant is tied to employment - defines relationship between employment and stock rights

2. Change of Control Provisions: Optional section for accelerated vesting in case of company sale or merger

3. Drag-Along Rights: Optional provisions forcing grantee to participate in company sale

4. Tag-Along Rights: Optional rights allowing grantee to participate in sale of shares by major shareholders

5. Non-Competition and Confidentiality: Optional if additional restrictions on grantee are required

6. Power of Attorney: Optional authorization for company to execute certain documents on behalf of grantee

7. Electronic Communications: Optional provisions for electronic notices and communications

8. Sharia Compliance: Optional section if agreement needs to comply with Islamic law principles

What schedules should be included in a Restricted Stock Agreement?

1. Schedule 1 - Share Certificate: Form of share certificate for restricted stock

2. Schedule 2 - Vesting Schedule: Detailed breakdown of vesting dates and conditions

3. Schedule 3 - Shareholders Agreement: Copy or key terms of applicable shareholders agreement

4. Schedule 4 - Notice of Exercise: Form for exercising any rights under the agreement

5. Schedule 5 - Tax Elections: Any applicable tax forms or elections

6. Appendix A - Company's Articles of Association: Relevant excerpts from company's articles affecting restricted stock

7. Appendix B - Equity Incentive Plan: Copy of the governing equity incentive plan if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Ƶ

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions




















































Clauses



































Relevant Industries

Technology

Financial Services

Professional Services

Healthcare

Real Estate

E-commerce

Manufacturing

Telecommunications

Consulting

Media and Entertainment

Energy

Start-ups

Venture Capital

Private Equity

Relevant Teams

Legal

Human Resources

Finance

Executive Leadership

Company Secretariat

Compensation & Benefits

Corporate Governance

Compliance

Employee Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Senior Executive

Department Head

Managing Director

Vice President

Senior Manager

Key Engineer

Product Manager

Research Scientist

Legal Counsel

Human Resources Director

Sales Director

Business Development Manager

Company Secretary

Board Member

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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