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Equity Grant Agreement

Equity Grant Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Equity Grant Agreement

"I need an Equity Grant Agreement for our Saudi-based technology startup to grant 5,000 restricted shares to our new Chief Technology Officer, with a four-year vesting schedule starting March 1, 2025, and including standard non-compete provisions for the tech sector."

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Document background
The Equity Grant Agreement is a fundamental document used by Saudi Arabian companies to formalize the allocation of equity interests to key stakeholders. This agreement is particularly important in the context of employee incentivization programs, executive compensation packages, and strategic partnerships. It must comply with various Saudi regulations, including the Companies Law, Capital Market Law, and relevant CMA regulations for listed companies. The document typically specifies grant terms, vesting conditions, transfer restrictions, and rights attached to the equity. It's especially relevant for growing companies, listed entities, and organizations implementing long-term incentive plans. The agreement needs to address specific Saudi legal requirements such as Zakat implications, foreign ownership restrictions if applicable, and corporate governance requirements.
Suggested Sections

1. Parties: Identification of the company issuing the equity and the recipient

2. Background: Context of the grant, relationship between parties, and corporate authority for the grant

3. Definitions: Key terms used throughout the agreement including Share, Grant Date, Vesting Date, etc.

4. Grant of Equity: Details of the equity being granted, including number of shares/units and class of shares

5. Vesting Terms: Vesting schedule, conditions, and requirements for the equity to vest

6. Transfer Restrictions: Limitations on transfer of granted shares and any lock-up periods

7. Rights and Obligations: Rights attached to the shares and obligations of the recipient

8. Termination Provisions: Consequences of termination of employment/relationship on vested and unvested equity

9. Tax Matters: Tax and Zakat implications and responsibilities

10. Confidentiality: Confidentiality obligations regarding the agreement and company information

11. Governing Law and Jurisdiction: Specification of Saudi law as governing law and jurisdiction for disputes

12. General Provisions: Standard clauses including amendments, notices, and entire agreement provisions

Optional Sections

1. Employment Relationship: Include when recipient is an employee to clarify that the grant does not affect at-will employment

2. Shareholder Rights: Include for immediate grants of shares with voting rights

3. Corporate Events: Include for listed companies or those planning IPO/merger to address change in control scenarios

4. Foreign Ownership Provisions: Include when recipient is a foreign national to ensure compliance with foreign investment laws

5. Board Approval Requirements: Include for grants to senior executives or board members

6. Non-Competition and Non-Solicitation: Include when recipient is in senior position or has access to sensitive information

7. Clawback Provisions: Include for senior executives or when required by company policy

Suggested Schedules

1. Grant Notice: Specific details of the grant including number of shares, grant date, and vesting schedule

2. Vesting Schedule: Detailed breakdown of vesting dates and amounts

3. Shareholders Agreement: Copy or relevant excerpts of the existing shareholders agreement

4. Board Resolution: Copy of board resolution approving the equity grant

5. Tax Treatment Summary: Summary of applicable tax and Zakat implications

6. Form of Share Certificate: Template of share certificate to be issued upon vesting

7. Acceptance Form: Form for recipient to formally accept the grant and its terms

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
Applicable Law
Board
Business Day
Capital Market Authority
Cause
Change of Control
Company
Confidential Information
Corporate Event
Effective Date
Equity Interest
Exercise Period
Fair Market Value
Good Leaver
Grant
Grant Date
Grant Notice
Grantee
Group
Initial Public Offering
Ministry of Commerce
Parent Company
Performance Conditions
Plan
Recipient
Related Parties
Restriction Period
Saudi Companies Law
Securities
Share Capital
Shareholders Agreement
Shares
Subsidiary
Termination Date
Transfer
Unvested Shares
Vested Shares
Vesting Date
Vesting Period
Vesting Schedule
Zakat
Clauses
Grant of Equity
Vesting Conditions
Transfer Restrictions
Voting Rights
Dividend Rights
Tag-Along Rights
Drag-Along Rights
Pre-emptive Rights
Right of First Refusal
Put and Call Options
Performance Conditions
Termination Rights
Change of Control
Corporate Reorganization
Confidentiality
Non-Competition
Non-Solicitation
Tax and Zakat
Representations and Warranties
Regulatory Compliance
Information Rights
Board Matters
Share Certificates
Exit Provisions
Force Majeure
Assignment
Notices
Amendments
Entire Agreement
Severability
Governing Law
Dispute Resolution
Shariah Compliance
Foreign Ownership Restrictions
Data Protection
Costs and Expenses
Relevant Industries

Technology

Financial Services

Professional Services

Manufacturing

Healthcare

Real Estate

Retail

Telecommunications

Energy

Construction

Education

Consulting

Transportation

Media and Entertainment

Relevant Teams

Legal

Human Resources

Finance

Corporate Governance

Executive Leadership

Board Secretariat

Compensation & Benefits

Corporate Communications

Investor Relations

Internal Audit

Compliance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Executive Director

Board Member

Senior Manager

Department Head

Key Employee

Technical Lead

Senior Engineer

Sales Director

Regional Manager

Research Scientist

Product Manager

Legal Counsel

Human Resources Director

Financial Controller

Operations Manager

Business Development Manager

Industries
Companies Law (2015): The primary legislation governing corporate entities in Saudi Arabia, including provisions for share issuance, transfer restrictions, and shareholder rights
Capital Market Law (2003): Regulates securities, their issuance, and trading in Saudi Arabia, including provisions for private placements and share transfers
Saudi Labor Law (Royal Decree No. M/51): Contains provisions relevant to employee compensation and benefits, which may impact how equity grants are structured as part of employment packages
Income Tax Law (Royal Decree No. M/1): Governs taxation of income, including potential tax implications of equity grants and capital gains
Zakat, Tax and Customs Authority (ZATCA) Regulations: Relevant for Zakat calculations and obligations for Saudi companies and shareholders
Competition Law (Royal Decree No. M/75): May be relevant if equity grants result in significant ownership changes or affect market competition
Corporate Governance Regulations: Issued by the Capital Market Authority, contains provisions regarding transparency and disclosure requirements for listed companies
Foreign Investment Law: Relevant if the equity grant involves foreign recipients or if the company has foreign ownership
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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