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Restricted Stock Agreement Template for India

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Key Requirements PROMPT example:

Restricted Stock Agreement

"I need a Restricted Stock Agreement under Indian law for granting 10,000 shares to our new Chief Technology Officer, with a 4-year vesting schedule starting March 1, 2025, and including special provisions for accelerated vesting in case of a company sale."

Document background
The Restricted Stock Agreement serves as a crucial instrument for companies in India looking to offer equity-based compensation to attract and retain talented employees. This document is typically used when a company wishes to grant actual shares to employees or service providers, subject to certain restrictions and vesting conditions. The agreement must comply with Indian regulatory requirements, including the Companies Act, 2013, SEBI regulations, and applicable tax laws. It contains detailed provisions about the grant, vesting schedule, transfer restrictions, and rights of the stockholder during the restriction period. Companies often implement this as part of their overall compensation strategy, particularly for senior executives and key employees, while ensuring alignment with Indian corporate governance standards and securities regulations.
Suggested Sections

1. Parties: Identification of the Company and the Recipient/Grantee of the restricted stock

2. Background: Context of the agreement, including reference to any equity incentive plan and board approvals

3. Definitions: Key terms including Restricted Stock, Vesting Date, Vesting Schedule, Restriction Period, etc.

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

5. Vesting Requirements: Vesting schedule, conditions, and requirements for the restrictions to lapse

6. Transfer Restrictions: Limitations on transfer, sale, or encumbrance of shares during the restriction period

7. Rights During Restriction Period: Voting rights, dividend rights, and other shareholder privileges during the restriction period

8. Termination of Employment: Consequences of employment termination on restricted stock

9. Tax Obligations: Tax responsibilities of both parties and procedures for tax withholding

10. Compliance with Laws: Obligations to comply with Indian securities laws, SEBI regulations, and other applicable laws

11. Representations and Warranties: Standard declarations by both parties regarding capacity, authority, and compliance

12. General Provisions: Standard clauses including notices, amendments, governing law, and dispute resolution

Optional Sections

1. Foreign Investment Compliance: Required when the recipient is a non-resident Indian or foreign national, addressing FEMA compliance

2. Electronic Records and Communications: Optional section for companies maintaining electronic records of restricted stock

3. Drag-Along Rights: Optional provisions for forced sale in case of company sale or merger

4. Tag-Along Rights: Optional rights for the recipient to participate in sale of shares by major shareholders

5. Lock-in Period: Additional restrictions beyond vesting period, often used for key employees

6. Accelerated Vesting: Optional provisions for acceleration of vesting in specific circumstances like change in control

7. Shareholders Agreement Compliance: Required if the company has an existing shareholders agreement affecting restricted stock

Suggested Schedules

1. Schedule 1 - Details of Restricted Stock Grant: Specific details of shares granted including number, class, and nominal value

2. Schedule 2 - Vesting Schedule: Detailed timeline and conditions for vesting of restricted stock

3. Schedule 3 - Shareholders' Rights: Detailed description of rights attached to the shares

4. Schedule 4 - Tax Computation Guidelines: Guidelines for calculating tax implications at various stages

5. Appendix A - Board Resolution: Copy of board resolution approving the restricted stock grant

6. Appendix B - Equity Incentive Plan: Reference to or extract of the company's equity incentive plan

7. Appendix C - Regulatory Compliance Checklist: Checklist of compliance requirements under Indian law

Authors

Alex Denne

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

Relevant legal definitions







































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Relevant Industries

Technology

Financial Services

Professional Services

Manufacturing

E-commerce

Healthcare

Telecommunications

Consulting

Software Development

Biotechnology

Retail

Real Estate

Education Technology

Relevant Teams

Legal

Human Resources

Finance

Corporate Secretarial

Executive Leadership

Compensation & Benefits

Corporate Governance

Compliance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Chief Operating Officer

Senior Vice President

Vice President

Director

Senior Manager

Department Head

Principal Engineer

Senior Software Engineer

Key Account Manager

Product Manager

Research Scientist

Senior Consultant

Executive Director

General Counsel

Head of Human Resources

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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