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Employee Shareholder Agreement

Employee Shareholder Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Employee Shareholder Agreement

"I need an Employee Shareholder Agreement for our Dubai-based tech startup, where we want to grant our senior software developer 2% ownership with a 3-year vesting period starting March 2025, including standard non-compete and UAE-compliant good/bad leaver provisions."

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Document background
The Employee Shareholder Agreement is a crucial document used when companies in the UAE wish to offer equity ownership to their employees as part of their compensation or retention strategy. It's particularly relevant for startups, growth companies, and established businesses looking to align employee interests with company success. The agreement must comply with UAE corporate and employment laws, including the UAE Commercial Companies Law and Labor Law, while addressing both the employment relationship and shareholding rights. This document typically includes detailed provisions on share vesting schedules, transfer restrictions, good leaver/bad leaver provisions, and valuation mechanisms. It's commonly used for key employees, executives, and strategic hires where share ownership is part of the employment package.
Suggested Sections

1. Parties: Identification of the Company, the Employee Shareholder, and any other relevant parties

2. Background: Context of the agreement, employment relationship, and shareholding arrangement

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Employment Terms: Key employment terms and their relationship to shareholding rights

5. Share Subscription and Ownership: Details of shares being issued/transferred, price, and payment terms

6. Vesting Provisions: Schedule and conditions for share vesting

7. Shareholders' Rights and Obligations: Voting rights, dividend rights, and general obligations as a shareholder

8. Transfer Restrictions: Limitations on transfer of shares and required approvals

9. Good Leaver/Bad Leaver Provisions: Definition and consequences of different types of employment termination

10. Confidentiality: Protection of company confidential information

11. Intellectual Property Rights: Ownership and protection of IP created during employment

12. Non-Competition and Non-Solicitation: Post-employment restrictions aligned with UAE law

13. Exit Provisions: Mechanisms for share disposal upon employment termination

14. Governing Law and Jurisdiction: UAE law as governing law and jurisdiction for disputes

Optional Sections

1. Tag-Along Rights: Include when minority shareholder protection is required

2. Drag-Along Rights: Include when majority shareholders need power to force sale

3. Put and Call Options: Include when specific share transfer mechanisms are needed

4. Board Representation: Include when employee is to have board rights

5. Performance Targets: Include when share vesting is linked to specific performance metrics

6. Share Price Adjustment: Include when share value may need adjustment based on specific events

7. Additional Investment Rights: Include when employee may have rights to acquire additional shares

8. Shareholder Loans: Include if employee will provide or receive shareholder loans

Suggested Schedules

1. Schedule 1 - Share Details: Details of share class, number, nominal value, and percentage ownership

2. Schedule 2 - Vesting Schedule: Detailed timeline and conditions for share vesting

3. Schedule 3 - Company Information: Key company details, capitalization table, and corporate structure

4. Schedule 4 - Employment Terms: Detailed employment terms and conditions

5. Schedule 5 - Share Valuation Methodology: Agreed method for valuing shares for various transfer scenarios

6. Schedule 6 - Deed of Adherence: Form for new shareholders to agree to terms of existing agreements

7. Schedule 7 - Power of Attorney: Standard form of power of attorney for share transfers

8. Appendix A - Key Performance Indicators: Detailed performance metrics if linked to vesting or rights

9. Appendix B - Restricted Activities: Detailed list of restricted business activities post-employment

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Articles of Association
Bad Leaver
Board
Business Day
Business Hours
Call Option
Cause
Companies Law
Company
Competitor
Completion
Confidential Information
Control
Deed of Adherence
Directors
Drag-Along Notice
Drag-Along Rights
Effective Date
Employee
Employment Agreement
Encumbrance
Exercise Notice
Exercise Period
Exercise Price
Fair Market Value
Financial Year
Good Leaver
Group
Holding Company
Intellectual Property Rights
Labor Law
Listing
Lock-up Period
Material Breach
Notice
Option Shares
Parent Company
Parties
Performance Targets
Permitted Transferee
Put Option
Related Party
Relevant Securities
Reserved Matters
Restricted Business
Sale
Share Capital
Shareholder
Shareholders' Agreement
Shares
Subsidiary
Tag-Along Notice
Tag-Along Rights
Territory
Transfer
UAE
Unvested Shares
Valuation
Vested Shares
Vesting Date
Vesting Period
Vesting Schedule
Voting Rights
Clauses
Interpretation
Share Subscription
Share Vesting
Share Transfer Restrictions
Employment Terms
Remuneration
Duties and Obligations
Working Hours
Annual Leave
Confidentiality
Intellectual Property
Non-Competition
Non-Solicitation
Good Leaver Provisions
Bad Leaver Provisions
Tag-Along Rights
Drag-Along Rights
Put Option
Call Option
Share Valuation
Board Representation
Voting Rights
Dividend Rights
Information Rights
Reserved Matters
Performance Requirements
Termination
Exit Provisions
Death and Incapacity
Share Certificates
Pre-emptive Rights
Company Buy-back Rights
Power of Attorney
Further Assurance
Representations and Warranties
Data Protection
Notices
Assignment
Severability
Entire Agreement
Variation
Waiver
Costs
Force Majeure
Governing Law
Dispute Resolution
Relevant Industries

Technology

Financial Services

Professional Services

Healthcare

Real Estate

Manufacturing

Retail

Education

Construction

Energy

Media and Entertainment

Telecommunications

Consulting

Hospitality

E-commerce

Relevant Teams

Legal

Human Resources

Finance

Executive Leadership

Corporate Governance

Compliance

Company Secretariat

Board of Directors

Share Registry

Corporate Affairs

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Technology Officer

Managing Director

Senior Vice President

Department Head

Senior Manager

Technical Lead

Principal Engineer

Senior Developer

Key Account Manager

Business Development Director

Regional Manager

Product Manager

Research Director

Senior Consultant

Investment Manager

Operations Director

Industries
UAE Federal Law No. 32 of 2021 (Commercial Companies Law): Governs corporate structures, shareholding arrangements, and shareholder rights and obligations in UAE companies
UAE Federal Decree Law No. 33 of 2021 (Labor Law): Regulates employment relationships, including terms of employment, benefits, and termination provisions that need to be considered alongside shareholder rights
SCA Board Decision No. (3/R.M) of 2000: Regulations concerning the trading, clearing, settlement, transfer of ownership and custody of securities in the UAE
UAE Federal Law No. 5 of 1985 (Civil Transactions Law): Provides the general framework for contracts and obligations, including principles of contract formation and enforcement
UAE Federal Decree-Law No. 47 of 2022 (Corporate Tax Law): Governs taxation aspects of share ownership and benefits derived from employment-related share schemes
UAE Federal Law No. 4 of 2012 (Competition Law): Regulates competition and market practices, including restrictions on ownership concentration
DIFC Employment Law No. 2 of 2019: Specific employment regulations for DIFC-based companies that may affect employee shareholder arrangements in this free zone
UAE Federal Law No. 14 of 2018 (Central Bank Law): Relevant for any share pledge arrangements or financial aspects of the employee shareholder agreement
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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