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Stock Option Purchase Agreement

Stock Option Purchase Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Stock Option Purchase Agreement

"I need a Stock Option Purchase Agreement for our Saudi-based technology company to grant options to senior executives, with a four-year vesting schedule starting March 2025 and including special provisions for a potential IPO in 2025."

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Document background
The Stock Option Purchase Agreement is a crucial document used in Saudi Arabian companies to formalize the granting of stock options to employees, executives, or other eligible individuals. It has gained increasing importance with Saudi Arabia's economic diversification efforts and the growth of private sector employment under Vision 2030. This agreement is essential when companies wish to offer equity incentives while ensuring compliance with Saudi Arabian corporate law, Capital Market Authority regulations, and Sharia principles. The document typically includes detailed provisions on option grants, vesting schedules, exercise procedures, and restrictions on transfer, while addressing specific requirements of Saudi Arabian tax law and corporate governance regulations. It's particularly relevant for companies looking to attract and retain talent through equity-based compensation structures.
Suggested Sections

1. Parties: Identification of the company granting the options and the option holder, including full legal names and addresses

2. Background: Context of the agreement, relationship between parties, and purpose of the option grant

3. Definitions: Detailed definitions of key terms used throughout the agreement, including technical terms related to options and shares

4. Grant of Option: Specific details of the option grant, including number of shares, class of shares, and grant date

5. Exercise Price: Specification of the price at which options can be exercised and payment terms

6. Vesting Schedule: Detailed timeline and conditions for when options become exercisable

7. Exercise Period: Timeframe during which options can be exercised and procedures for exercise

8. Restrictions on Transfer: Limitations on transferability of options and resulting shares

9. Termination Provisions: Consequences of termination of employment or relationship with the company

10. Company's Obligations: Company's commitments regarding share issuance and maintaining option scheme

11. Option Holder's Representations: Warranties and representations by the option holder

12. Compliance with Laws: Provisions ensuring compliance with Saudi laws, regulations, and Sharia principles

13. Tax Matters: Treatment of tax implications and responsibilities

14. Notices: Process for formal communications between parties

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

16. Execution: Signature blocks and execution requirements

Optional Sections

1. Change of Control Provisions: Special provisions applying in case of company sale or merger - include for senior executives or key employees

2. Shareholder Rights: Rights attached to shares post-exercise - include if different from standard shareholder rights

3. Non-Competition and Confidentiality: Additional restrictions on option holder - include for senior positions or when handling sensitive information

4. Sharia Compliance Declaration: Explicit statement of Sharia compliance - include when required by investors or company policy

5. Drag-Along and Tag-Along Rights: Special share transfer rights - include for senior management or significant option grants

6. International Tax Provisions: Special tax considerations - include for international option holders

7. Currency Provisions: Specifications for foreign currency handling - include for international option holders or if exercise price is in foreign currency

Suggested Schedules

1. Option Certificate: Formal certificate detailing the option grant specifics

2. Exercise Notice Form: Template form for exercising options

3. Vesting Schedule Details: Detailed breakdown of vesting dates and conditions

4. Shareholders' Agreement: Copy or relevant excerpts of the shareholders' agreement that will apply post-exercise

5. Company's Articles of Association: Relevant excerpts relating to share issuance and transfer

6. Regulatory Compliance Checklist: List of required regulatory filings and approvals

7. Tax Computation Examples: Illustrative examples of tax treatment on exercise

8. CMA Approval Documents: Copies of relevant Capital Market Authority approvals or filings

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
Clauses
Grant of Option
Option Price
Exercise of Option
Vesting
Payment Terms
Share Issuance
Transfer Restrictions
Representations and Warranties
Confidentiality
Non-Competition
Non-Solicitation
Termination
Change of Control
Tag-Along Rights
Drag-Along Rights
Regulatory Compliance
Sharia Compliance
Capital Market Authority Compliance
Tax Matters
Information Rights
Voting Rights
Dividend Rights
Assignment
Amendment
Notices
Force Majeure
Dispute Resolution
Governing Law
Jurisdiction
Entire Agreement
Severability
Waiver
Third Party Rights
Costs and Expenses
Data Protection
Anti-Money Laundering
Counterparts
Relevant Industries

Technology

Financial Services

Professional Services

Manufacturing

Healthcare

Retail

Telecommunications

Energy

Real Estate

Construction

Education

E-commerce

Consulting

Mining and Materials

Relevant Teams

Legal

Human Resources

Finance

Compliance

Corporate Governance

Executive Leadership

Board Secretariat

Risk Management

Operations

Administration

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

HR Director

Company Secretary

Compliance Officer

Board Member

Department Head

Senior Manager

Executive Director

Vice President

Managing Director

Technical Lead

Senior Engineer

Investment Manager

Risk Manager

Operations Director

Regional Manager

Industries
Companies Law (2015): Governs corporate entities, share issuance, transfer of shares, and shareholders' rights in Saudi Arabia. Particularly relevant for structuring the stock option agreement and ensuring compliance with corporate governance requirements.
Capital Market Law (CML): Regulates securities, including the issuance and trading of shares and financial instruments. Essential for ensuring the stock option agreement complies with securities regulations.
CMA Regulations on Employee Stock Options: Specific regulations issued by the Capital Market Authority governing employee stock option plans and their implementation in Saudi companies.
Saudi Labor Law: Relevant for employee-related aspects of stock options, including terms of compensation and benefits, especially if the agreement is part of an employee compensation package.
Zakat, Tax and Customs Authority (ZATCA) Regulations: Governs the tax implications of stock options, including capital gains tax and any tax obligations arising from the exercise of options.
Corporate Governance Regulations: Sets out requirements for transparency, disclosure, and fairness in corporate transactions, including those related to share options and executive compensation.
Anti-Money Laundering Law: Relevant for ensuring proper documentation and verification of parties involved in the stock option transaction and compliance with financial regulations.
Sharia Law Principles: Fundamental Islamic law principles that must be considered to ensure the agreement is compliant with Sharia requirements, particularly regarding speculation and uncertainty in contracts.
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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