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Stock Appreciation Rights Agreement

Stock Appreciation Rights Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Stock Appreciation Rights Agreement

"I need a Stock Appreciation Rights Agreement for our UAE-based technology company to grant SARs to our senior executives, with a four-year vesting schedule starting March 2025 and including special provisions for our planned IPO in 2025."

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Document background
The Stock Appreciation Rights Agreement is utilized by UAE companies to provide employees with equity-linked compensation without diluting actual shareholding. This document is particularly relevant in contexts where direct share ownership is complicated by UAE foreign ownership restrictions or corporate structure limitations. The agreement details the grant of SARs, vesting conditions, exercise procedures, and payment terms, while ensuring compliance with UAE Federal Law No. 32 of 2021 (Companies Law), Federal Decree Law No. 33 of 2021 (Labor Law), and relevant securities regulations. It's commonly used for executive compensation, employee retention, and long-term incentive programs, especially in private companies or UAE subsidiaries of multinational corporations where traditional stock options may not be practical.
Suggested Sections

1. Parties: Identification of the Company and the SAR recipient (Participant)

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

3. Definitions: Key terms including Base Price, Fair Market Value, Grant Date, SAR, Vesting Date, Exercise Period

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 SARs

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

7. Payment Upon Exercise: Calculation and method of payment for exercised SARs

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

9. Termination of Employment: Treatment of SARs upon various termination scenarios

10. Compliance with Laws: Adherence to UAE laws and regulations

11. Tax Obligations: Responsibilities for taxes and other statutory deductions

12. Confidentiality: Non-disclosure obligations regarding the agreement terms

13. General Provisions: Standard clauses including amendments, notices, governing law, and jurisdiction

Optional Sections

1. Change in Control: Provisions for treatment of SARs in case of company merger, acquisition, or restructuring

2. Non-Competition and Non-Solicitation: Restrictive covenants, if applicable to senior executives

3. Corporate Governance Requirements: Additional provisions for listed companies subject to specific governance rules

4. Free Zone Specific Provisions: Additional terms if company operates in DIFC, ADGM, or other Free Zones

5. International Tax Considerations: Additional tax provisions for international participants

6. Shariah Compliance: Additional provisions if agreement needs to be Shariah-compliant

7. Clawback Provisions: Terms for recovering payments in case of misconduct or restatement

8. Currency Conversion: Provisions for payment in different currencies if applicable

Suggested Schedules

1. Grant Notice: Details of specific grant including number of SARs, base price, and vesting schedule

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

3. Exercise Notice Form: Template form for exercising vested SARs

4. Participation Agreement: Additional terms and acknowledgments to be signed by participant

5. Fair Market Value Calculation: Methodology for calculating the fair market value of shares

6. Regulatory Approvals: Copies of relevant corporate and regulatory approvals

7. Tax Treatment Summary: Overview of applicable tax implications in UAE

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 Industries

Financial Services

Technology

Professional Services

Real Estate

Healthcare

Energy

Telecommunications

Manufacturing

Retail

Consulting

Investment Banking

Private Equity

Insurance

Relevant Teams

Legal

Human Resources

Finance

Corporate Governance

Compensation & Benefits

Executive Office

Corporate Secretary

Compliance

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Executive Director

Managing Director

Senior Vice President

Vice President

Department Head

Senior Manager

Key Account Manager

Technical Director

Research Director

Investment Manager

Regional Manager

Business Development Manager

Senior Consultant

Principal Engineer

Senior Advisor

Industries
UAE Federal Law No. 32 of 2021 (Companies Law): Governs commercial companies in the UAE, including provisions related to share capital, corporate governance, and securities issuance
UAE Federal Decree Law No. 33 of 2021 (Labor Law): Regulates employment relationships and must be considered for employee compensation schemes including SARs
SCA Board of Directors' Decision No. (3/R.M) of 2017: Concerns the organization and regulation of securities markets, including rules on share-based compensation for listed companies
UAE Federal Decree-Law No. 47 of 2022 on Taxation: Relevant for understanding tax implications of SARs in the UAE, including corporate tax considerations
UAE Federal Decree Law No. 19 of 2018 (FDI Law): Regulates foreign direct investment and ownership restrictions which may impact stock-based compensation schemes
Central Bank Regulations on Corporate Governance: Provides guidelines for listed companies regarding executive compensation and stock-based incentive programs
DIFC Employment Law No. 2 of 2019: Specific employment regulations for DIFC Free Zone which may be relevant if the company operates within DIFC
ADGM Employment Regulations 2019: Specific employment regulations for ADGM Free Zone which may be relevant if the company operates within ADGM
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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