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Founders Shares Agreement

Founders Shares Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Founders Shares Agreement

I need a Founders Shares Agreement for a technology startup in Dubai, with three founders contributing different amounts of capital and intellectual property, where one founder needs to be a UAE national holding 51% shares but with profit sharing arrangements to be modified.

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Document background
The Founders Shares Agreement is a crucial document used when establishing a new company in the UAE or formalizing the relationship between existing founders. It serves as the primary instrument for defining the founders' rights, obligations, and relationships within the company structure. This agreement must comply with UAE Federal Law No. 32 of 2021 and related regulations, including specific provisions for foreign ownership and local partner requirements where applicable. The document typically includes detailed sections on share capital structure, management rights, transfer restrictions, exit mechanisms, and protective provisions. It's essential for startups, joint ventures, and new business formations across various sectors in the UAE, providing a clear framework for corporate governance and dispute resolution.
Suggested Sections

1. Parties: Identification of all founding shareholders and the company

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

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

4. Share Capital and Shareholding: Details of share capital structure, share classes, and initial shareholding percentages

5. Subscription and Payment: Terms for share subscription, payment obligations, and timing

6. Founders' Commitments: Core obligations, roles, and responsibilities of each founder

7. Business of the Company: Scope of business activities and any restrictions

8. Management and Control: Governance structure, board composition, and decision-making processes

9. Reserved Matters: Decisions requiring special majority or unanimous consent

10. Transfer Restrictions: Limitations on share transfers and required procedures

11. Pre-emptive Rights: Rights of first refusal on new share issuances

12. Tag-Along and Drag-Along Rights: Co-sale rights and forced sale provisions

13. Exit Provisions: Mechanisms for company sale, IPO, or other exit events

14. Confidentiality: Protection of company and founder confidential information

15. Non-Competition and Non-Solicitation: Restrictions on competitive activities and employee poaching

16. Term and Termination: Duration of agreement and termination circumstances

17. Dispute Resolution: Procedures for resolving disputes, including jurisdiction and governing law

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

Optional Sections

1. Intellectual Property Rights: Provisions for IP ownership and transfer when founders are contributing intellectual property

2. Founder Employment: Terms of founders' employment when founders will be employed by the company

3. Future Funding: Provisions regarding future investment rounds and related procedures when external investment is anticipated

4. Vesting Provisions: Share vesting schedules and conditions when founders agree to vest their shares over time

5. Dead-Lock Resolution: Specific procedures for resolving management dead-locks in case of equal shareholding

6. Founder Loans: Terms for any loans provided by founders to the company

7. Share Valuation: Methodology for share valuation in various transfer scenarios

8. UAE Local Partner Provisions: Special provisions when a UAE local partner is involved for compliance with local ownership requirements

Suggested Schedules

1. Schedule 1: Details of the Company: Company registration information, share capital, and current shareholding structure

2. Schedule 2: Business Plan: Initial business plan and key milestones

3. Schedule 3: Deed of Adherence: Template for new shareholders to become bound by the agreement

4. Schedule 4: Reserved Matters List: Detailed list of decisions requiring special approval

5. Schedule 5: Initial Board Composition: List of initial directors and their details

6. Schedule 6: Founder Commitments: Detailed description of each founder's specific commitments and contributions

7. Schedule 7: Share Transfer Procedures: Detailed procedures and forms for share transfers

8. Schedule 8: Anti-Money Laundering Compliance: AML procedures and requirements 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
Board
Business
Business Day
Business Plan
Chairman
Company
Companies Law
Confidential Information
Deed of Adherence
Director
Effective Date
Encumbrance
Fair Market Value
Financial Year
Founder
Group
Initial Business Plan
Intellectual Property Rights
Material Contract
Memorandum
Articles of Association
Ordinary Resolution
Permitted Transferee
Register of Members
Related Party
Reserved Matters
Share Capital
Shareholder
Shares
Special Resolution
Subscription Price
Tag-Along Notice
Tag-Along Right
Transfer
UAE
UAE Dirham
Drag-Along Notice
Drag-Along Right
Exit Event
Completion
Management Committee
Territory
Trade License
Commercial Register
Clauses
Interpretation
Share Capital
Share Subscription
Payment Obligations
Completion
Warranties
Management and Control
Board Composition
Shareholder Meetings
Reserved Matters
Information Rights
Pre-emptive Rights
Share Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Exit Provisions
Non-Competition
Non-Solicitation
Confidentiality
Intellectual Property
Founder Commitments
Dividend Policy
Default
Deadlock Resolution
Termination
Dispute Resolution
Governing Law
Assignment
Notices
Severability
Entire Agreement
Force Majeure
Counterparts
Costs
Waiver
Third Party Rights
Further Assurance
Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Real Estate

Professional Services

Manufacturing

Retail

Media and Entertainment

Education

Food and Beverage

Consulting

Industrial

Logistics

Telecommunications

Relevant Teams

Legal

Corporate Governance

Executive Leadership

Finance

Compliance

Corporate Secretariat

Business Development

Strategy

Investment

Operations

Relevant Roles

CEO

Founder

Co-founder

Managing Director

Chief Legal Officer

General Counsel

Corporate Secretary

Chief Financial Officer

Legal Director

Business Development Director

Chief Operating Officer

Board Member

Company Director

Compliance Officer

Legal Counsel

Investment Manager

Industries
UAE Federal Law No. 32 of 2021 (Companies Law): The primary legislation governing commercial companies in the UAE, including provisions for shareholding structures, corporate governance, and shareholders' rights and obligations
UAE Federal Law No. 17 of 2004 (Commercial Concealment Law): Regulations preventing arrangements where UAE nationals act as proxy owners for foreign shareholders, ensuring transparency in ownership structures
UAE Federal Law No. 4 of 2012 (Competition Law): Regulations governing anti-competitive practices and economic concentration that may affect shareholding arrangements
UAE Federal Law No. 19 of 2018 (Foreign Direct Investment Law): Legislation governing foreign ownership of UAE companies and related investment provisions
UAE Federal Law No. 18 of 1993 (Commercial Transactions Law): General framework for commercial transactions and business activities that may affect shareholders' relationships
UAE Federal Law No. 37 of 1992 (Trademarks Law): Relevant for provisions related to intellectual property rights ownership between founders
DIFC Law No. 5 of 2018 (Companies Law DIFC): Specific regulations for companies established in Dubai International Financial Centre (if applicable)
ADGM Companies Regulations 2020: Specific regulations for companies established in Abu Dhabi Global Market (if applicable)
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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