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Equity Participation Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Equity Participation Agreement

"I need an Equity Participation Agreement for a foreign technology company investing 30% stake in our Saudi-based software development company, with specific provisions for board representation and technology transfer requirements."

Document background
The Equity Participation Agreement is a crucial document used when an investor seeks to acquire an ownership stake in a Saudi Arabian company. It is particularly relevant in the context of Saudi Vision 2030, which has opened up various sectors to increased private and foreign investment. The agreement must comply with Saudi Companies Law, Foreign Investment Law, and Sharia principles, making it distinct from similar agreements in other jurisdictions. It typically covers detailed provisions for corporate governance, shareholder rights, profit distribution mechanisms, and exit strategies. The document is essential for both domestic and foreign investments, requiring careful consideration of local ownership requirements, regulatory approvals, and capital market regulations where applicable.
Suggested Sections

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

2. Background: Context of the transaction, current ownership structure, and purpose of the equity participation

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and rules of interpretation

4. Investment Terms: Details of the equity participation, including investment amount, shareholding percentage, and payment terms

5. Completion Conditions: Prerequisites and conditions precedent to the investment, including regulatory approvals and corporate authorizations

6. Completion Mechanics: Step-by-step process for closing the transaction and timeline

7. Representations and Warranties: Statements of fact and assurances from all parties regarding their capacity, authority, and business condition

8. Corporate Governance: Management structure, board composition, reserved matters, and voting rights

9. Shareholder Rights and Obligations: Detailed rights and responsibilities of shareholders, including capital contributions and profit distribution

10. Transfer Restrictions: Limitations on share transfers, right of first refusal, tag-along and drag-along rights

11. Exit Provisions: Mechanisms for exit including IPO, put options, call options, and sale procedures

12. Confidentiality: Obligations regarding confidential information and publicity

13. Term and Termination: Duration of the agreement and circumstances allowing for termination

14. Governing Law and Dispute Resolution: Choice of Saudi law and dispute resolution mechanisms compliant with local regulations

15. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

16. Execution: Signature blocks and execution formalities

Optional Sections

1. Anti-dilution Protection: Protection mechanisms against future share issuances, used when dealing with sophisticated investors

2. Islamic Finance Compliance: Specific provisions ensuring Sharia compliance, required when parties specifically require Islamic finance structures

3. Employee Stock Option Pool: Provisions for employee share schemes, included when parties plan to implement employee incentive programs

4. Intellectual Property Rights: Specific IP arrangements between shareholders, needed when IP is a significant asset

5. Non-Competition and Non-Solicitation: Restrictions on competitive activities, included when protecting business interests is crucial

6. Related Party Transactions: Rules for dealing with related party transactions, important in family businesses or complex corporate groups

7. Foreign Investment Provisions: Special provisions required when foreign investors are involved, addressing SAGIA requirements

Suggested Schedules

1. Schedule 1 - Corporate Information: Details of the company including corporate documents, licenses, and registrations

2. Schedule 2 - Shareholding Structure: Pre and post-investment shareholding tables and capital structure

3. Schedule 3 - Business Plan: Detailed business plan and financial projections

4. Schedule 4 - Completion Deliverables: List of documents and actions required for completion

5. Schedule 5 - Reserved Matters: Detailed list of matters requiring special approval

6. Schedule 6 - Warranties: Detailed warranties given by the parties

7. Schedule 7 - Key Management: Details of key management positions and initial appointees

8. Schedule 8 - Deed of Adherence: Form of deed for new shareholders joining the agreement

9. Appendix A - Board Rules: Detailed procedures for board meetings and decision-making

10. Appendix B - Valuation Principles: Agreed principles for future valuations and share pricing

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

Manufacturing

Real Estate

Healthcare

Education

Financial Services

Retail

Energy

Infrastructure

Telecommunications

Professional Services

Transportation

Tourism

Entertainment

Mining

Agriculture

Relevant Teams

Legal

Finance

Corporate Development

Investment

Compliance

Risk Management

Strategy

Board of Directors

Executive Management

Corporate Secretariat

Business Development

Mergers & Acquisitions

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

General Counsel

Investment Director

Corporate Development Manager

Legal Director

Compliance Officer

Investment Manager

Board Director

Managing Director

Corporate Finance Manager

Business Development Director

Strategy Director

Private Equity Manager

Venture Capital Manager

M&A Director

Company Secretary

Financial Controller

Risk Manager

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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