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Restricted Stock Unit Award Agreement

Restricted Stock Unit Award Agreement Template for South Africa

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Key Requirements PROMPT example:

Restricted Stock Unit Award Agreement

"I need a Restricted Stock Unit Award Agreement under South African law for our tech company's senior developers, with quarterly vesting over 4 years starting March 2025, and including performance conditions linked to our company's revenue growth."

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Document background
The Restricted Stock Unit Award Agreement is a crucial document used in South African corporate environments to formalize the grant of RSUs as part of employee compensation and retention strategies. This agreement is typically implemented when companies wish to provide equity-based compensation to key employees while deferring the actual transfer of shares until specific vesting conditions are met. The document must comply with South African legislation, including the Companies Act, Income Tax Act, and Exchange Control Regulations. It contains detailed provisions regarding the grant, vesting conditions, settlement terms, tax implications, and regulatory compliance requirements. Companies use this agreement to align employee interests with corporate objectives while ensuring adherence to local legal and regulatory frameworks.
Suggested Sections

1. Parties: Identification of the company granting the RSUs and the employee/participant receiving them

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

3. Definitions and Interpretation: Definitions of key terms including RSUs, Vesting Date, Award Date, Share Price, etc., and rules of interpretation

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

5. Vesting Conditions: Specific conditions that must be met for RSUs to vest, including time-based and/or performance-based conditions

6. Settlement of RSUs: Process and timing for converting vested RSUs into shares or cash equivalent

7. Termination of Employment: Treatment of RSUs upon various types of employment termination

8. Restrictions on Transfer: Limitations on the participant's ability to transfer, assign or encumber RSUs

9. Tax Provisions: Tax obligations, withholding requirements, and responsibilities of both parties

10. Compliance with Laws: Requirements for compliance with securities laws, exchange control regulations, and other applicable legislation

11. Administration: Details about plan administration, record-keeping, and communications

12. General Provisions: Standard contractual terms including notices, amendments, governing law, and jurisdiction

Optional Sections

1. Performance Conditions: Additional section when RSUs are subject to performance-based vesting conditions

2. Change of Control: Special provisions for treatment of RSUs in case of corporate restructuring or change of control

3. Malus and Clawback: Provisions allowing the company to reduce or recoup RSUs in cases of misconduct or material misstatement

4. Foreign Exchange Provisions: Required for international participants or when RSUs involve cross-border elements

5. B-BBEE Provisions: Specific provisions related to Broad-Based Black Economic Empowerment requirements if applicable

6. Data Protection: Detailed privacy and data protection provisions when extensive personal data processing is involved

Suggested Schedules

1. Schedule 1: Award Certificate: Specific details of the RSU grant including number of units, grant date, and vesting schedule

2. Schedule 2: Vesting Schedule: Detailed timeline and conditions for the vesting of RSUs

3. Schedule 3: Performance Metrics: Detailed description of any performance conditions and calculation methodologies

4. Schedule 4: Tax Examples: Illustrative examples of tax calculations and withholding scenarios

5. Schedule 5: Acceptance Form: Form for formal acceptance of the RSU award by the participant

6. Appendix A: Equity Incentive Plan Terms: Summary or extract of relevant terms from the company's equity incentive plan

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
Relevant Industries

Financial Services

Technology

Mining and Resources

Professional Services

Telecommunications

Manufacturing

Retail

Healthcare

Energy

Media and Entertainment

Relevant Teams

Human Resources

Legal

Finance

Compensation and Benefits

Corporate Secretariat

Risk and Compliance

Executive Leadership

Board Secretariat

Tax

Payroll

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Executive Director

Senior Manager

Department Head

Technical Specialist

Software Engineer

Sales Executive

Research Analyst

Product Manager

Legal Counsel

Human Resources Director

Finance Manager

Compensation Specialist

Plan Administrator

Company Secretary

Risk Manager

Operations Director

Industries
Companies Act 71 of 2008: Primary legislation governing companies in South Africa, including provisions for share capital, securities issuance, and corporate governance requirements
Income Tax Act 58 of 1962: Governs the taxation of RSUs, including tax implications at grant, vesting, and disposal, as well as employee share scheme provisions under Section 8C
Financial Markets Act 19 of 2012: Regulates financial markets, securities trading, and market abuse provisions that may affect RSU arrangements
Exchange Control Regulations 1961: Regulates cross-border financial transactions, including the transfer of securities to non-residents and offshore payments
Basic Conditions of Employment Act 75 of 1997: Relevant for RSU agreements as they form part of employment benefits and compensation structures
Financial Advisory and Intermediary Services Act 37 of 2002: May be relevant if the RSU arrangement involves financial advice or intermediary services
Protection of Personal Information Act 4 of 2013: Governs the processing of personal information in the context of administering RSU awards and maintaining participant records
Broad-Based Black Economic Empowerment Act 53 of 2003: May be relevant if the RSU program is part of B-BBEE compliance or ownership requirements
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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