Restricted Stock Unit Agreement Template for South Africa

The Restricted Stock Unit Agreement is a crucial document used when companies in South Africa wish to grant employees the right to receive company shares or their cash equivalent at future dates, typically subject to vesting conditions. This type of agreement is commonly implemented as part of employee compensation and retention strategies, particularly for key personnel. The document must comply with South African legislation, including the Companies Act, Income Tax Act, Exchange Control Regulations, and where applicable, B-BBEE requirements. It contains detailed provisions on grant terms, vesting schedules, settlement procedures, tax implications, and corporate action scenarios. The agreement is particularly important in the context of South African exchange control regulations, which have specific requirements for share-based compensation schemes.

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

2. Background: Context of the RSU grant, reference to any equity incentive plan, and corporate authority for the grant

3. Definitions and Interpretation: Definitions of key terms and interpretation rules, including specific South African legal terms

4. Grant of RSUs: Details of the RSU award, including number of units and grant date

5. Vesting Conditions: Vesting schedule, performance conditions if any, and circumstances affecting vesting

6. Settlement of RSUs: Process and timing for converting RSUs to shares or cash equivalent upon vesting

7. Tax Provisions: Tax obligations, withholding requirements, and compliance with South African tax laws

8. Exchange Control Compliance: Compliance with South African Exchange Control Regulations

9. Participant's Rights: Rights (or lack thereof) regarding dividends, voting, and other shareholder matters prior to vesting

10. Restrictions on Transfer: Limitations on transferring or encumbering RSUs

11. Termination of Employment: Effect of various types of employment termination on RSUs

12. Corporate Events: Treatment of RSUs in case of corporate restructuring, mergers, etc.

13. Administration: Administrative aspects and role of board/committee in managing RSUs

14. General Provisions: Standard contractual terms including notices, governing law, and dispute resolution