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Equity Ownership Agreement

Equity Ownership Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Equity Ownership Agreement

"I need an Equity Ownership Agreement for a UAE technology startup, where three international investors will acquire a total of 40% ownership, with specific provisions for technology IP protection and future funding rounds."

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Document background
The Equity Ownership Agreement is a crucial document used in the UAE for structuring and documenting share ownership arrangements in companies. It is essential for transactions involving the transfer of company ownership, establishment of new business ventures, or reorganization of existing shareholding structures. The agreement must comply with UAE Federal Law No. 32 of 2021 and related regulations, including foreign ownership restrictions and economic substance requirements. This document typically includes detailed provisions on share transfer mechanics, shareholder rights and obligations, corporate governance, profit distribution, and exit mechanisms. The Equity Ownership Agreement is particularly important in the UAE context due to specific local requirements regarding beneficial ownership disclosure, foreign investment regulations, and the need to consider both mainland and free zone jurisdictional requirements.
Suggested Sections

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

2. Background: Recitals explaining the context of the agreement and the parties' intentions

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Sale and Purchase of Shares: Core terms of the equity transfer including number of shares, price, and payment terms

5. Completion: Conditions precedent, completion mechanics, and timing of the transfer

6. Warranties and Representations: Standard warranties from both seller and purchaser regarding capacity, authority, and ownership

7. Corporate Governance: Management structure, board composition, and voting rights

8. Shareholder Rights and Obligations: Key rights and obligations of shareholders including voting and dividend rights

9. Transfer Restrictions: Limitations on future share transfers and pre-emptive rights

10. Termination: Circumstances under which the agreement can be terminated and consequences

11. Confidentiality: Obligations regarding confidential information and trade secrets

12. Dispute Resolution: Mechanism for resolving disputes, including jurisdiction and governing law

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

Optional Sections

1. Tag-Along and Drag-Along Rights: Include when minority shareholder protection or exit mechanisms are required

2. Share Valuation: Include when there's a need for specific methodology for future share valuations

3. Non-Competition and Non-Solicitation: Include when protecting business interests from departing shareholders

4. Intellectual Property Rights: Include when IP ownership or licensing is relevant to the equity transaction

5. External Financing: Include when the purchase is partially financed by external sources

6. Employee Share Scheme: Include when the agreement involves employee share ownership

7. Put and Call Options: Include when parties want future purchase/sale rights

8. Dividend Policy: Include when specific dividend distribution rules are needed

9. Dead-Lock Resolution: Include when equal ownership situations require specific resolution mechanisms

Suggested Schedules

1. Share Capital and Shareholding Structure: Details of current and post-completion shareholding structure

2. Completion Requirements: Detailed list of documents and actions required for completion

3. Warranties: Detailed warranties given by the sellers regarding the company and shares

4. Company Information: Key company details including assets, contracts, and financial information

5. Board Regulations: Detailed procedures for board meetings and decision-making

6. Reserved Matters: List of decisions requiring special majority or unanimous approval

7. Share Transfer Procedures: Detailed procedures for implementing share transfers

8. Deed of Adherence: Template for new shareholders to accede to the agreement

9. Anti-Money Laundering Documentation: Required AML and KYC documentation as per UAE law

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
Articles of Association
Board
Business Day
Business Plan
Completion
Completion Date
Confidential Information
Consideration
Control
Director
Encumbrance
Event of Default
Fair Market Value
Financial Year
Free Zone Authority
Governing Law
Group
Holding Company
Initial Business Plan
Intellectual Property Rights
Key Management
Material Adverse Change
Ministry of Economy
Ordinary Resolution
Parties
Permitted Transferee
Purchase Price
Related Party
Relevant Authority
Reserved Matters
Sale Shares
Share Capital
Shareholder
Shareholder Loan
Special Resolution
Subsidiary
Tag-Along Notice
Tag-Along Right
Target Company
Territory
Trade License
Transfer
UAE
Ultimate Beneficial Owner
Valuation
Warranties
Working Hours
Clauses
Interpretation
Sale and Purchase
Purchase Price
Completion
Pre-Completion Obligations
Post-Completion Obligations
Share Transfer Restrictions
Board Composition
Shareholder Meetings
Reserved Matters
Tag-Along Rights
Drag-Along Rights
Pre-emptive Rights
Non-Competition
Non-Solicitation
Confidentiality
Information Rights
Dividend Policy
Share Valuation
Exit Rights
Deadlock Resolution
Events of Default
Anti-Dilution
Representations and Warranties
Indemnification
Assignment
Force Majeure
Termination
Governing Law
Dispute Resolution
Notices
Costs and Expenses
Entire Agreement
Severability
Amendments
Waiver
Further Assurance
Counterparts
Third Party Rights
Relevant Industries

Technology

Real Estate

Manufacturing

Professional Services

Retail

Healthcare

Financial Services

Education

Hospitality

Construction

Energy

Media and Entertainment

Logistics and Transportation

E-commerce

Relevant Teams

Legal

Finance

Compliance

Corporate Secretariat

Risk Management

Executive Leadership

Board of Directors

Corporate Development

Mergers & Acquisitions

Investment

Governance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

General Counsel

Corporate Secretary

Legal Director

Managing Director

Board Member

Compliance Officer

Investment Manager

Corporate Lawyer

Finance Director

Business Development Director

Company Secretary

Mergers & Acquisitions Manager

Private Equity Manager

Risk Manager

Corporate Governance Officer

Industries
UAE Federal Law No. 32 of 2021 (Companies Law): The primary legislation governing commercial companies in the UAE, including provisions for company formation, shareholding structures, and corporate governance
UAE Federal Decree-Law No. 19 of 2018 (FDI Law): Regulates foreign direct investment and allows up to 100% foreign ownership in certain sectors
UAE Federal Law No. 4 of 2012 (Competition Law): Regulates anti-competitive practices and economic concentration, relevant for ownership transfers and mergers
UAE Federal Law No. 1 of 2006 (Electronic Transactions Law): Governs electronic signatures and transactions, important for modern equity agreements executed digitally
UAE Federal Law No. 5 of 1985 (Civil Code): Provides the fundamental principles of contract law, including formation, validity, and enforcement
UAE Federal Law No. 10 of 2018 (BOC Law): Regulations concerning beneficial ownership and control, requiring disclosure of ultimate beneficial owners
UAE Cabinet Resolution No. 58 of 2020: Regulates actual beneficial owner procedures in the UAE and requirements for ownership transparency
UAE Federal Decree-Law No. 14 of 2018 (Central Bank Law): Relevant for any financing aspects and banking regulations related to equity transactions
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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