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Restricted Stock Unit Agreement Template for Hong Kong

A comprehensive legal agreement governed by Hong Kong law that establishes the terms and conditions for granting Restricted Stock Units (RSUs) to employees or service providers. The document outlines the vesting schedule, settlement terms, tax implications, and various rights and obligations of both the company and the recipient. It incorporates specific provisions to comply with Hong Kong securities regulations, employment laws, and tax requirements while providing a framework for equity-based compensation that aligns employee interests with company performance.

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What is a Restricted Stock Unit Agreement?

The Restricted Stock Unit Agreement serves as a crucial document for companies operating in Hong Kong that wish to provide equity-based compensation to their employees or service providers. It is typically used as part of a broader equity incentive plan, setting forth the specific terms under which RSUs are granted, including vesting conditions, settlement procedures, and tax implications. The agreement must comply with Hong Kong's regulatory framework, including the Securities and Futures Ordinance, Companies Ordinance, and relevant tax laws. This document is particularly important for companies looking to attract and retain talent while aligning employee interests with long-term company success. It includes provisions for RSU administration, restrictions on transfer, treatment upon employment termination, and data privacy considerations specific to Hong Kong's legal requirements.

What sections should be included in a Restricted Stock Unit Agreement?

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

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

3. Definitions: Key terms used throughout the agreement, including 'RSUs', 'Vesting Date', 'Service Provider', etc.

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

5. Vesting Schedule: Specific timeline and conditions for RSU vesting

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

7. Taxation and Withholding: Tax obligations and company's rights to withhold taxes

8. Restrictions on Transfer: Limitations on ability to transfer, assign or encumber RSUs

9. Termination of Employment: Impact of employment termination on unvested and vested RSUs

10. Nature of Grant: Acknowledgments regarding the discretionary nature of the grant and employment rights

11. Data Privacy: Consent for collection and processing of personal data

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

What sections are optional to include in a Restricted Stock Unit Agreement?

1. Clawback Provisions: Used when company wants right to recoup RSUs in cases of misconduct or financial restatement

2. Change in Control Provisions: Added to address treatment of RSUs in event of company merger or acquisition

3. Malus Provisions: Include when company wants ability to reduce unvested RSUs for specified conduct

4. International Provisions: Added for employees working across multiple jurisdictions

5. Trust Arrangements: Include when RSUs are to be held in trust structure

6. Non-Competition and Non-Solicitation: Added when RSUs are tied to post-employment restrictive covenants

7. Dividend Equivalents: Include if RSUs will receive dividend equivalent payments

What schedules should be included in a Restricted Stock Unit Agreement?

1. Schedule 1 - Grant Notice: Details of specific grant including number of RSUs, grant date, and vesting schedule

2. Schedule 2 - Vesting Conditions: Detailed performance or time-based conditions for vesting

3. Schedule 3 - Administrative Procedures: Procedures for RSU administration, settlement and tax withholding

4. Appendix A - Data Privacy Notice: Detailed privacy notice and consent form for Hong Kong

5. Appendix B - Tax Summary: Summary of tax implications and obligations in Hong Kong

6. Appendix C - Country-Specific Terms: Additional terms applicable to specific jurisdictions if international provisions included

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Hong Kong

Document Type

Stock Agreement

Cost

Free to use

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