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Restricted Stock Unit Agreement Template for India

A comprehensive legal agreement governed by Indian law that establishes the terms and conditions for granting Restricted Stock Units (RSUs) to employees. The document outlines the vesting schedule, rights and restrictions, tax implications, and compliance requirements under Indian securities laws, particularly the SEBI regulations and Companies Act. It includes provisions for grant administration, vesting conditions, termination scenarios, and mechanisms for share issuance, while ensuring compliance with Indian tax laws and foreign exchange regulations where applicable.

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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 India who wish to offer equity-based compensation to their employees. It is commonly used by both Indian companies and multinational corporations with Indian operations to attract and retain talent while aligning employee interests with company growth. The agreement must comply with various Indian regulations, including the Companies Act, 2013, SEBI guidelines, and relevant tax laws. This document typically details the RSU grant terms, vesting conditions, exercise procedures, and tax implications, while ensuring compliance with Indian securities laws and foreign exchange regulations where applicable. It's particularly important for companies looking to implement long-term incentive programs or establish employee stock ownership structures within the Indian regulatory framework.

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

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

2. Background: Explains the context of the RSU grant and references the equity plan under which RSUs are being granted

3. Definitions: Defines key terms used throughout the agreement including 'RSUs', 'Vesting Date', 'Plan', 'Committee', etc.

4. Grant of RSUs: Details of the RSU grant including number of units, grant date, and reference to plan terms

5. Vesting Schedule: Specifies the vesting timeline and conditions for the RSUs

6. Rights and Restrictions: Outlines the rights associated with RSUs and any restrictions on transfer or sale

7. Tax Obligations: Addresses tax implications, withholding requirements, and responsibilities of both parties

8. Compliance with Laws: Ensures compliance with Indian securities laws, SEBI regulations, and other applicable laws

9. Termination of Employment: Consequences of various types of employment termination on unvested and vested RSUs

10. Governing Law and Jurisdiction: Specifies Indian law as governing law and establishes jurisdiction for disputes

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

1. Foreign Exchange Compliance: Required when RSUs are granted by foreign parent companies, addressing FEMA compliance

2. Electronic Delivery: Optional section for companies implementing electronic documentation and delivery systems

3. Data Privacy: Detailed privacy provisions required when personal data is transferred internationally

4. Non-Competition and Non-Solicitation: Additional restrictions that may be imposed as part of the RSU grant

5. Clawback Provisions: Optional provisions allowing company to recoup RSUs in cases of misconduct or financial restatement

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

1. Schedule 1 - Grant Notice: Specific details of the RSU grant including number of units, grant date, and vesting schedule

2. Schedule 2 - Equity Incentive Plan: Copy or summary of the main equity incentive plan under which RSUs are granted

3. Appendix A - Tax Implications: Detailed explanation of tax treatment and obligations in Indian jurisdiction

4. Appendix B - Consent Forms: Required forms for regulatory compliance and tax withholding authorizations

5. Appendix C - Country-Specific Terms: Additional terms specific to Indian law requirements and restrictions

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

India

Document Type

Equity Agreement

Cost

Free to use

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