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Shareholder Termination Agreement

Shareholder Termination Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Shareholder Termination Agreement

"I need a Shareholder Termination Agreement for a departing minority shareholder (15% ownership) in our Saudi technology company, with payment in three installments over 6 months starting March 2025, including standard non-compete provisions."

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Document background
The Shareholder Termination Agreement is a critical document used when one or more shareholders wish to exit their ownership position in a Saudi Arabian company. It becomes necessary when shareholders decide to part ways due to various circumstances such as strategic disagreements, retirement, or business restructuring. The agreement must comply with Saudi Companies Law, Capital Market Authority regulations (for listed companies), and Sharia principles. It typically includes detailed provisions for share valuation, payment mechanisms, regulatory approvals from the Ministry of Commerce, and requirements for updating the commercial registration. The document serves to protect all parties' interests while ensuring a smooth transition of ownership and preventing future disputes. Special considerations are included for foreign investment scenarios, tax and Zakat obligations, and ongoing business operations.
Suggested Sections

1. Parties: Identification of all parties including the departing shareholder(s), remaining shareholders, and the company

2. Background: Context of the shareholding relationship, reference to original shareholders agreement, and reason for termination

3. Definitions: Key terms used throughout the agreement, including specific Saudi law terminology

4. Share Valuation: Agreed value of shares and valuation methodology in compliance with Saudi Companies Law

5. Payment Terms: Structure and timing of payment for shares, including any Sharia-compliant financing arrangements

6. Completion Requirements: Steps required to complete the termination, including regulatory filings with Ministry of Commerce

7. Mutual Release and Waiver: Release of claims and obligations between parties, subject to Sharia principles

8. Confidentiality: Ongoing obligations regarding company information and trade secrets

9. Tax and Zakat Matters: Treatment of tax and Zakat obligations pre and post termination

10. Governing Law and Jurisdiction: Confirmation of Saudi law governance and jurisdiction of Saudi courts

11. Notices: Communication procedures between parties for agreement purposes

12. Execution: Signature requirements and execution formalities under Saudi law

Optional Sections

1. Non-Compete Provisions: Restrictions on departing shareholder's future business activities - include if competitive concerns exist

2. Intellectual Property Rights: Treatment of IP rights where departing shareholder was involved in IP development

3. Ongoing Projects: Handling of incomplete projects or contracts where departing shareholder was involved

4. Employee Matters: Include if departing shareholder has employment relationship or management role

5. Transitional Services: Include if departing shareholder needs to provide temporary services post-termination

6. Earn-out Provisions: Include if part of share value is tied to future performance

7. Foreign Investment Provisions: Include if departing shareholder is a foreign investor requiring SAGIA compliance

Suggested Schedules

1. Share Certificate Details: Copy of share certificates and transfer documentation

2. Valuation Report: Independent valuation report or agreed calculation method

3. Payment Schedule: Detailed payment terms and installment schedule if applicable

4. Company Documents: Relevant corporate documents including shareholders agreement and articles

5. Regulatory Approvals: List of required governmental approvals and filing requirements

6. Outstanding Obligations: List of any outstanding obligations or liabilities

7. Board Resolutions: Corporate approvals for the termination

8. Completion Checklist: Step-by-step list of actions required to complete the termination

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

alex.den.21@genieai.co
Relevant legal definitions






































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Relevant Industries

Financial Services

Manufacturing

Technology

Real Estate

Healthcare

Retail

Professional Services

Construction

Energy

Telecommunications

Education

Transportation and Logistics

Hospitality

Mining and Resources

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Governance

Compliance

Board Secretariat

Risk Management

Treasury

Corporate Affairs

Shareholder Relations

Investment

Executive Leadership

Business Development

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Secretary

Legal Director

Finance Director

Compliance Officer

Board Member

Managing Director

Investment Manager

Shareholder Relations Manager

Corporate Governance Officer

Risk Manager

Business Development Director

Company Registrar

Treasury 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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