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Stock Appreciation Rights Agreement

Stock Appreciation Rights Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Stock Appreciation Rights Agreement

"I need a Stock Appreciation Rights Agreement under Saudi Arabian law for a privately-held technology company, covering 50 senior executives with a three-year vesting period and specific provisions for Shariah compliance."

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Document background
The Stock Appreciation Rights Agreement is used by companies operating in Saudi Arabia to provide key employees with long-term incentive compensation tied to the company's value appreciation. This document becomes essential when organizations wish to offer equity-linked benefits without actual share transfers, making it particularly valuable for private companies or subsidiaries of international corporations. The agreement must comply with Saudi Arabian regulations, including the Companies Law, Capital Market Authority regulations, and Shariah principles. It typically includes detailed provisions on grant terms, vesting schedules, exercise procedures, valuation methodologies, and payment mechanisms. The document is structured to align with Saudi Arabia's Vision 2030 objectives of developing the private sector while ensuring proper corporate governance and employee retention through competitive compensation practices.
Suggested Sections

1. Parties: Identification of the Company and the Employee/Participant receiving the SARs

2. Background: Context of the agreement, including reference to any employee incentive plan or board approval

3. Definitions: Key terms including Base Price, Fair Market Value, Exercise Date, Vesting Period, and other relevant terminology

4. Grant of SARs: Details of the SAR grant, including number of units and base price

5. Vesting Schedule: Timing and conditions for vesting of the SARs

6. Exercise of SARs: Process and conditions for exercising vested SARs

7. Calculation of Payment: Method for calculating the appreciation amount and payment mechanics

8. Term and Expiration: Duration of the SARs and expiration conditions

9. Termination of Employment: Impact of various types of employment termination on SARs

10. Compliance with Laws: Provisions ensuring compliance with Saudi regulations and Shariah principles

11. Tax Obligations: Treatment of tax/zakat implications and responsibilities

12. Confidentiality: Confidentiality obligations regarding the agreement terms

13. Governing Law and Jurisdiction: Specification of Saudi law as governing law and relevant courts

14. Entire Agreement: Integration clause and relationship to other documents

Optional Sections

1. Change in Control: Provisions addressing the impact of company ownership changes, included for public companies or those considering public offering

2. Non-Competition and Non-Solicitation: Additional restrictive covenants, included when additional protection is needed

3. Currency Conversion: For international companies, provisions addressing currency conversion between SAR and other currencies

4. Administrative Committee: Establishment of a committee to oversee the SAR program, typically for larger companies

5. Electronic Notices: Provisions for electronic communications and exercises, for companies with digital systems

6. Shariah Compliance Declaration: Explicit confirmation of Shariah compliance, particularly for Islamic financial institutions

Suggested Schedules

1. Grant Notice: Specific details of the SAR grant including number of units, base price, and vesting schedule

2. Calculation Methodology: Detailed methodology for calculating SAR value and appreciation

3. Exercise Form: Template form for exercising vested SARs

4. Shariah Compliance Certificate: If applicable, certification from Shariah board or advisor

5. Consent Forms: Required regulatory or administrative consent forms

6. Tax Treatment Summary: Summary of applicable tax/zakat treatment and calculations

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
Base Price
Board
Business Day
Capital Market Authority
Cause
Change in Control
Company
Compensation Committee
Confidential Information
Corporate Event
Disability
Effective Date
Eligible Employee
Exercise Date
Exercise Notice
Exercise Period
Exercise Price
Fair Market Value
Financial Year
Good Leaver
Grant Date
Grant Notice
Grantee
Group
Holding Period
Islamic Calendar
Market Price
Parent Company
Participant
Payment Date
Performance Conditions
Plan
Plan Administrator
Retirement
SAR Unit
SARs
SAMA
Saudi Arabian Law
Service Period
Shariah Compliance
Subsidiary
Termination Date
Termination of Employment
Transfer
Valuation Date
Valuation Method
Vested SARs
Vesting Date
Vesting Period
Vesting Schedule
ZATCA
Clauses
Grant of Rights
Vesting
Exercise Rights
Payment Terms
Valuation
Term and Termination
Employment Status
Compliance
Confidentiality
Non-Competition
Non-Solicitation
Data Protection
Tax Obligations
Currency
Amendment
Assignment
Notices
Severability
Waiver
Force Majeure
Governing Law
Dispute Resolution
Entire Agreement
Shariah Compliance
Regulatory Approval
Administration
Change in Control
Corporate Events
Representations and Warranties
Transfer Restrictions
Clawback
Record Keeping
Electronic Communications
Third Party Rights
Costs and Expenses
Relevant Industries

Financial Services

Technology

Healthcare

Manufacturing

Real Estate

Energy

Telecommunications

Professional Services

Retail

Construction

Mining

Education

Hospitality

Transportation

Agriculture

Relevant Teams

Human Resources

Legal

Finance

Executive Management

Corporate Governance

Compensation & Benefits

Compliance

Treasury

Corporate Secretary Office

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Executive Director

Senior Manager

Department Head

Regional Manager

Technical Director

Sales Director

Research Director

Project Manager

Senior Engineer

Principal Scientist

Investment Manager

Legal Counsel

Human Resources Director

Financial Controller

Business Development Manager

Industries
Companies Law (2015 and its amendments): Provides the fundamental framework for corporate governance and company operations in Saudi Arabia, including regulations on share capital, corporate instruments, and shareholder rights
Capital Market Law (Royal Decree No. M/30): Regulates securities, financial instruments, and market activities in Saudi Arabia, including provisions relevant to stock-based compensation arrangements
Capital Market Authority Regulations: Detailed rules and regulations governing securities, including requirements for stock-based compensation plans and their disclosure
Saudi Labor Law (Royal Decree No. M/51): Governs employment relationships and compensation matters, including provisions affecting employee benefits and incentive schemes
Zakat, Tax and Customs Authority (ZATCA) Regulations: Governs the tax treatment of stock appreciation rights and other equity-based compensation, including reporting requirements and tax obligations
Corporate Governance Regulations: Sets out requirements for corporate governance including transparency in compensation schemes and related party transactions
Shariah Principles: Islamic law principles that underpin Saudi Arabian legal system, ensuring compliance with Islamic financial and commercial principles
Saudi Arabian Monetary Authority (SAMA) Regulations: Relevant for financial aspects of stock appreciation rights, particularly if the company is in the financial sector
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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