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Equity Distribution Agreement

Equity Distribution Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Equity Distribution Agreement

"I need an Equity Distribution Agreement for my UAE-based technology startup to distribute 25% of company shares to new investors, including foreign institutional investors, with completion targeted for March 2025 and ensuring compliance with UAE foreign ownership restrictions."

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Document background
The Equity Distribution Agreement is a crucial document used when a company seeks to distribute or redistribute its equity shares in the United Arab Emirates. This agreement is particularly important in the UAE context due to specific regulatory requirements, including foreign ownership restrictions and compliance with Federal Law No. 2 of 2015 (Companies Law) and Federal Law No. 32 of 2021 (Commercial Companies Law). The document is typically used during capital raising, corporate restructuring, or implementation of employee share schemes. It details share allocation methods, pricing mechanisms, transfer procedures, and necessary regulatory approvals. The agreement must account for UAE-specific considerations such as free zone regulations where applicable, local ownership requirements, and Central Bank regulations regarding share transfer payments.
Suggested Sections

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

2. Background: Context of the agreement, including company details and purpose of the equity distribution

3. Definitions and Interpretation: Defined terms and interpretation rules used throughout the agreement

4. Appointment and Scope: Terms of appointment of distributor and scope of distribution rights

5. Equity Allocation: Details of equity shares to be distributed, including class, quantity, and value

6. Distribution Terms: Terms and conditions governing the distribution of equity, including timing and methods

7. Pricing and Payment: Share price determination, payment terms, and currency considerations

8. Regulatory Compliance: Compliance requirements under UAE law, including foreign ownership restrictions

9. Representations and Warranties: Statements of fact and assurances from all parties

10. Due Diligence: Requirements for due diligence and documentation

11. Transfer Restrictions: Limitations and conditions on share transfers

12. Term and Termination: Duration of agreement and termination provisions

13. Confidentiality: Protection of confidential information

14. Governing Law and Jurisdiction: UAE law as governing law and jurisdiction provisions

15. Notices: Communication procedures between parties

16. General Provisions: Standard boilerplate clauses including severability, entire agreement, etc.

Optional Sections

1. Foreign Ownership Provisions: Required when distributor includes foreign investors, detailing compliance with UAE foreign ownership restrictions

2. Free Zone Provisions: Required when the company operates in a UAE free zone, including specific free zone requirements

3. Tag-Along Rights: Optional protection for minority shareholders to join in sale of shares

4. Drag-Along Rights: Optional right of majority shareholders to force minority shareholders to join in sale

5. Pre-emptive Rights: Optional right of existing shareholders to maintain ownership percentage in new share issues

6. Anti-dilution Protection: Optional protection against equity dilution in future rounds

7. Board Representation: Optional provisions for board seats based on equity ownership

8. Digital Trading Provisions: Required when shares will be traded on digital platforms

Suggested Schedules

1. Schedule 1 - Share Capital Structure: Detailed breakdown of company's share capital structure

2. Schedule 2 - Distribution Schedule: Timeline and milestones for equity distribution

3. Schedule 3 - Pricing Mechanism: Detailed methodology for share price calculation

4. Schedule 4 - Required Approvals: List of regulatory and corporate approvals required

5. Schedule 5 - Transfer Procedures: Detailed procedures for executing share transfers

6. Schedule 6 - Required Documents: List of documents required for share transfers

7. Appendix A - Shareholder Information: Details of existing and new shareholders

8. Appendix B - Company Information: Corporate documents and certificates

9. Appendix C - Compliance Checklist: Regulatory compliance requirements checklist

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
Articles of Association
Board
Business Day
Capital
Central Bank
Closing
Closing Date
Company
Completion
Confidential Information
Consideration
Distribution Period
Distribution Rights
Distributor
Effective Date
Encumbrance
Equity Securities
Existing Shareholders
Financial Year
Foreign Ownership Restrictions
Free Zone Authority
Governing Law
Group
Initial Price
Intellectual Property Rights
Issuer
Material Adverse Change
New Shareholders
Ordinary Shares
Parties
Permitted Transferee
Preference Shares
Purchase Price
Regulatory Approvals
Regulatory Authority
Related Party
Relevant Exchange Rate
Representatives
Resolution
SCA
Securities
Share Capital
Share Certificate
Shareholder Register
Shareholders
Shares
Subsidiary
Term
Territory
Trade License
Transaction Documents
Transfer
UAE
UAE Companies Law
Warranties
Clauses
Appointment
Share Distribution
Distribution Rights
Pricing
Payment Terms
Transfer Restrictions
Pre-emptive Rights
Tag-Along Rights
Drag-Along Rights
Foreign Ownership Compliance
Regulatory Compliance
Due Diligence
Representations and Warranties
Conditions Precedent
Completion
Share Certificates
Share Register
Shareholder Rights
Board Representation
Confidentiality
Non-Competition
Anti-Dilution
Force Majeure
Term and Duration
Termination
Default
Remedies
Indemnification
Assignment
Notices
Amendments
Waiver
Severability
Costs and Expenses
Entire Agreement
Counterparts
Further Assurance
Governing Law
Dispute Resolution
Language
Relevant Industries

Financial Services

Investment Banking

Private Equity

Technology

Real Estate

Manufacturing

Healthcare

Retail

Energy

Telecommunications

Professional Services

Construction

Education

Transportation

Hospitality

Relevant Teams

Legal

Finance

Compliance

Corporate Governance

Investment

Risk Management

Corporate Affairs

Treasury

Executive Leadership

Board of Directors

Shareholder Relations

Business Development

Regulatory Affairs

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Corporate Secretary

Investment Manager

Compliance Officer

Financial Director

Business Development Director

Managing Partner

Board Member

Shareholder Relations Manager

Investment Banker

Private Equity Manager

Corporate Governance Officer

Risk Management Officer

Industries
Federal Law No. 2 of 2015 (Companies Law): The primary legislation governing companies in the UAE, covering establishment, registration, ownership structures, and corporate governance requirements
Federal Law No. 32 of 2021 (Commercial Companies Law): Updated law governing commercial companies, including provisions for shareholding, transfer of shares, and foreign ownership rules
Federal Decree-Law No. 19 of 2018 (Foreign Direct Investment Law): Regulates foreign investment and ownership in UAE companies, including permitted ownership percentages and restricted sectors
SCA Decision No. (3/R.M) of 2017: Regulations concerning the promotion and introduction of securities, including rules for equity distribution and trading
Federal Decree-Law No. 20 of 2018 (Anti-Money Laundering Law): Compliance requirements for ownership transfers and due diligence procedures in equity transactions
UAE Central Bank Circular No. 24/2000: Regulations regarding share transfer payments and financial transactions related to equity distribution
Free Zone Regulations (if applicable): Specific regulations governing company ownership and share transfers within UAE free zones, varying by free zone authority
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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