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Business Funding Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Business Funding Agreement

"I need a Business Funding Agreement for a 10 million SAR Murabaha facility between Al Ahli Bank and my technology startup company, with the funding to be disbursed in three tranches starting March 2025, secured by company assets and personal guarantees."

Document background
The Business Funding Agreement is a crucial document used in Saudi Arabia when establishing formal funding arrangements between financial institutions or investors and businesses seeking capital. This agreement is specifically designed to comply with Saudi Arabian law and Shariah principles, making it suitable for use in the Saudi market where all financial transactions must adhere to Islamic finance requirements. The document typically includes detailed provisions for the funding structure, profit-sharing mechanisms, security arrangements, and compliance requirements, while avoiding any elements of conventional interest-based financing. It's particularly relevant in the context of Saudi Arabia's Vision 2030 economic transformation program, which encourages private sector growth and diversification. The agreement needs to address various regulatory requirements including those from the Saudi Central Bank (SAMA), Capital Market Authority (CMA), and Ministry of Commerce, while also incorporating necessary Shariah governance elements.
Suggested Sections

1. Parties: Identification of the parties to the agreement, including full legal names, registration details, and addresses

2. Background: Context of the funding arrangement and brief description of the business purpose

3. Definitions and Interpretation: Definitions of key terms and interpretation rules, including Shariah compliance declarations

4. Funding Amount and Purpose: Details of the funding amount, purpose, and any tranches or conditions for disbursement

5. Shariah Structure: Specific details of the Islamic finance structure being used (e.g., Murabaha, Musharaka, etc.)

6. Conditions Precedent: Conditions that must be satisfied before funding is provided

7. Disbursement Mechanics: Procedures and requirements for drawing down the funding

8. Payment Provisions: Payment terms, profit rates, and payment mechanics compliant with Shariah principles

9. Security and Guarantees: Details of security arrangements and any guarantees provided

10. Representations and Warranties: Standard and specific representations and warranties from both parties

11. Covenants: Positive and negative obligations of the parties during the term of the agreement

12. Events of Default: Circumstances constituting default and consequences

13. Remedies: Rights and remedies available to parties in case of default or breach

14. Term and Termination: Duration of the agreement and termination provisions

15. Governing Law and Jurisdiction: Confirmation of Saudi law governance and jurisdiction provisions

16. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment

Optional Sections

1. Foreign Investment Provisions: Required when funding involves foreign investors, addressing specific requirements under Saudi Foreign Investment Law

2. Intercreditor Provisions: Required when multiple funders are involved, establishing priority and relationships between different funders

3. Special Purpose Vehicle (SPV) Provisions: Required when funding is structured through an SPV, including specific governance requirements

4. Regulatory Compliance: Additional section needed for regulated industries or when specific regulatory approvals are required

5. Tax Provisions: Detailed tax provisions when complex tax structures are involved or for cross-border funding

6. Intellectual Property Rights: Required when funding is tied to or secured by intellectual property

7. Environmental Compliance: Required for projects or businesses with significant environmental impacts

8. Employment Undertakings: Required when funding includes specific employment or Saudization requirements

Suggested Schedules

1. Schedule 1 - Funding Details: Detailed breakdown of funding amount, profit calculation, and payment schedule

2. Schedule 2 - Conditions Precedent Documents: List of all required documents and conditions to be satisfied

3. Schedule 3 - Form of Drawdown Notice: Template for requesting disbursement of funds

4. Schedule 4 - Security Documents: List and copies of all security documents

5. Schedule 5 - Corporate Documents: Copies of relevant corporate approvals and documents

6. Schedule 6 - Financial Covenants: Detailed financial covenants and calculation methodologies

7. Schedule 7 - Form of Compliance Certificate: Template for periodic compliance reporting

8. Appendix A - Business Plan: Detailed business plan and use of funds

9. Appendix B - Shariah Structure Diagram: Visual representation of the Islamic financing structure

10. Appendix C - Key Personnel: List of key personnel and their roles in the funded business

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions



















































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Relevant Industries

Technology and Digital

Manufacturing

Real Estate and Construction

Healthcare

Education

Retail and Consumer Goods

Energy and Utilities

Transportation and Logistics

Financial Services

Agriculture and Food

Tourism and Hospitality

Mining and Materials

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Development

Investment

Credit

Operations

Strategy

Islamic Banking

Corporate Finance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Finance Director

Treasury Manager

Investment Manager

Compliance Officer

Risk Manager

Business Development Director

Corporate Finance Manager

Shariah Compliance Officer

Project Finance Manager

Credit Risk Officer

Commercial Director

Managing Director

Industries








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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