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The Operating Partnership Agreement is a fundamental document used when establishing a formal business partnership in Saudi Arabia. It serves as the primary governing document that outlines the complete framework for partner relationships, business operations, and management structure. This agreement is essential for businesses seeking to operate in Saudi Arabia, whether between local partners or involving foreign investors, and must comply with the Saudi Companies Law, Ministry of Commerce regulations, and Sharia principles. The document typically covers crucial aspects such as capital contributions, profit-sharing mechanisms, management rights, decision-making processes, and partner obligations. It's particularly important as it provides legal protection for all parties involved and establishes clear guidelines for business operations while meeting local regulatory requirements.

1. Parties: Identification of all partners, including full legal names, addresses, and registration details for corporate partners

2. Background: Context of the partnership formation and its intended purpose

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

4. Partnership Formation and Term: Legal establishment of the partnership, its name, duration, and principal place of business

5. Business Purpose and Scope: Detailed description of partnership's business activities and limitations

6. Capital Contributions: Initial and subsequent capital contributions, valuation of non-cash contributions

7. Profit and Loss Distribution: Formula and timing for distributing profits and allocating losses

8. Management and Decision Making: Management structure, partner voting rights, and decision-making processes

9. Partner Rights and Obligations: Detailed rights and duties of partners, including participation in management

10. Banking and Financial Matters: Banking arrangements, accounting practices, and financial reporting requirements

11. Transfer of Partnership Interests: Rules for transferring partnership interests and restrictions thereof

12. Admission of New Partners: Procedures and requirements for admitting new partners

13. Withdrawal and Retirement: Process and implications of partner withdrawal or retirement

14. Dissolution and Liquidation: Circumstances leading to dissolution and procedures for liquidation

15. Governing Law and Dispute Resolution: Confirmation of Saudi law governance and dispute resolution mechanisms

16. Notices: Communication procedures between partners and the partnership

17. General Provisions: Miscellaneous legal provisions including amendments, severability, and entire agreement