Future Equity Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Future Equity Agreement

"I need a Future Equity Agreement for my Dubai-based AI startup to secure a $500,000 investment from a Silicon Valley VC firm, with a $5M valuation cap and 20% discount rate, to be completed by March 2025."

Document background
The Future Equity Agreement template is designed for use in the United Arab Emirates' startup investment landscape, providing a streamlined mechanism for early-stage investment. This document type has gained popularity in the UAE's growing startup ecosystem as it offers a more straightforward alternative to traditional convertible notes while complying with UAE Federal Law No. 32 of 2021 and related regulations. The agreement details the investment amount, conversion mechanisms, valuation caps, and discount rates, along with specific provisions required under UAE law. It's particularly useful for startups seeking quick access to capital without the immediate need to establish a valuation, while ensuring investor rights are protected under UAE jurisdiction. The document includes necessary provisions for both mainland UAE companies and those operating in free zones, making it versatile across different business structures within the UAE.
Suggested Sections

1. Parties: Identification of the Company and the Investor, including full legal names, registration details, and addresses

2. Background: Context of the agreement, including the company's business nature and the investor's intention to invest

3. Definitions: Key terms used throughout the agreement, including 'Equity Financing', 'Liquidity Event', 'Dissolution Event', and 'Valuation Cap'

4. Investment Amount: Specification of the investment amount and payment terms

5. Conversion Rights: Details of when and how the investment converts to equity, including conversion price and mechanisms

6. Company Representations: Company's warranties regarding its legal status, authority, and compliance with UAE laws

7. Investor Representations: Investor's warranties regarding investment capacity and compliance with UAE investment laws

8. Information Rights: Investor's rights to receive company information and financial statements

9. Assignment and Transfer: Rules regarding the transfer of rights under the agreement

10. Termination: Circumstances under which the agreement may be terminated

11. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes

Optional Sections

1. Most Favored Nation: Optional provision ensuring the investor receives the benefit of more favorable terms given to future investors

2. Pro-rata Rights: Optional right for the investor to participate in future funding rounds

3. Board Observer Rights: Optional provision granting the investor the right to attend board meetings

4. Shariah Compliance: Optional section for ensuring compliance with Islamic finance principles if required

5. Free Zone Provisions: Additional provisions required if the company is established in a UAE free zone

6. Foreign Investment Provisions: Additional provisions required for foreign investors under UAE FDI laws

Suggested Schedules

1. Schedule 1: Investment Details: Detailed terms of the investment including amount, valuation cap, and discount rate

2. Schedule 2: Capitalization Table: Current capital structure of the company

3. Schedule 3: Form of Conversion Notice: Template for executing conversion rights

4. Schedule 4: Key Terms of Future Equity Round: Anticipated terms for qualifying equity financing

5. Appendix A: Corporate Documents: Copies of relevant corporate documents including trade license and articles of association

6. Appendix B: Shareholders' Resolution: Required corporate approvals for the SAFE agreement

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

Relevant legal definitions
Clauses
Relevant Industries

Technology

E-commerce

FinTech

Healthcare

Education Technology

Artificial Intelligence

Blockchain

Renewable Energy

Real Estate Technology

Transportation

Logistics

Digital Media

Software Development

Biotechnology

Clean Technology

Relevant Teams

Legal

Finance

Compliance

Corporate Development

Investment

Executive Leadership

Business Development

Risk Management

Corporate Governance

Strategic Planning

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Investment Manager

Legal Counsel

Corporate Lawyer

Investment Director

Startup Founder

Managing Partner

Finance Director

Company Secretary

Compliance Officer

Business Development Manager

Venture Capital Associate

Investment Analyst

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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