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Memorandum Of Understanding Shareholders Agreement

Memorandum Of Understanding Shareholders Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Memorandum Of Understanding Shareholders Agreement

"I need a Memorandum of Understanding Shareholders Agreement for a UAE technology startup with three founding shareholders (two UAE nationals and one foreign investor), incorporating specific provisions for future funding rounds and technology IP protection, to be effective from March 2025."

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Document background
The Memorandum of Understanding Shareholders Agreement is a crucial document used in the UAE business environment when parties wish to establish a preliminary but detailed framework for their shareholder relationship. This hybrid document is particularly useful in the UAE context where businesses often need to establish clear intentions while maintaining flexibility for future negotiations. It combines the preliminary nature of an MOU with comprehensive shareholder provisions, making it suitable for both new ventures and existing companies restructuring their shareholder relationships. The document must comply with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and other relevant regulations, while addressing specific requirements for foreign ownership, management control, and corporate governance. It's commonly used during company formation, joint ventures, or when bringing in new investors, providing a foundation for the final shareholders' agreement while allowing parties to proceed with initial business activities.
Suggested Sections

1. Parties: Identification of all shareholders and the company, including full legal names, addresses, and registration details as per UAE requirements

2. Background: Context of the agreement, company information, and purpose of the shareholders' arrangement

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement, interpretation rules, and language governing provisions

4. Share Capital and Shareholding Structure: Details of authorized and issued share capital, shareholding percentages, and share classes

5. Management and Control: Board composition, appointment rights, voting mechanisms, and management structure

6. Shareholder Meetings: Procedures for general assemblies, voting rights, quorum requirements as per UAE Companies Law

7. Transfer of Shares: Basic share transfer restrictions, right of first refusal, and transfer procedures

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

9. Dividend Policy: Framework for dividend distributions and profit sharing

10. Confidentiality: Obligations regarding company and shareholder information confidentiality

11. Term and Termination: Duration of the agreement and circumstances for termination

12. Dispute Resolution: UAE law-compliant dispute resolution mechanisms, jurisdiction, and governing law

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

Optional Sections

1. Tag-Along Rights: Include when minority shareholder protection is required, giving right to join in sale of majority stake

2. Drag-Along Rights: Include when majority shareholders may need to force minorities to join in sale of company

3. Anti-dilution Provisions: Include for companies planning future funding rounds to protect existing shareholders

4. Shareholder Loans: Include if shareholders will provide financing to the company

5. Non-Competition: Include restrictions on shareholders engaging in competing businesses

6. Deadlock Resolution: Include for 50/50 joint ventures or where deadlock is likely

7. Exit Mechanisms: Include specific procedures for IPO, sale, or other exit strategies

8. Islamic Finance Compliance: Include if the company needs to comply with Shariah principles

Suggested Schedules

1. Schedule 1: Details of the Company: Company registration details, licenses, and corporate information

2. Schedule 2: Initial Shareholding Structure: Detailed breakdown of share ownership, share classes, and rights

3. Schedule 3: Business Plan: Initial business plan and key milestones

4. Schedule 4: Reserved Matters List: Comprehensive list of matters requiring special approval

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

6. Schedule 6: Share Valuation Methodology: Agreed methods for share valuation in various circumstances

7. Schedule 7: Form of Deed of Adherence: Template for new shareholders joining the agreement

8. Schedule 8: Key Performance Indicators: Metrics for measuring company and management performance

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
Board Meeting
Business Day
Business Plan
Chairman
Company
Confidential Information
Corporate Representative
Deed of Adherence
Director
Encumbrance
Event of Default
Exercise Notice
Fair Market Value
Financial Year
General Assembly
Governing Law
Group
Independent Director
Initial Business Plan
Intellectual Property Rights
Management Committee
Material Adverse Change
Memorandum of Association
Notice
Ordinary Resolution
Parties
Pre-emptive Rights
Prohibited Transfer
Purchase Price
Quorum
Related Party
Reserved Matters
Resolution
SAIFI Number
Share Capital
Share Transfer
Shareholder
Shareholders Register
Special Resolution
Subsidiary
Tag Along Right
Trade License
Transfer Notice
UAE
UAE Commercial Companies Law
Voting Rights
Clauses
Interpretation
Definitions
Share Capital
Share Transfer Restrictions
Pre-emptive Rights
Tag Along Rights
Drag Along Rights
Board Composition
Board Meetings
Shareholder Meetings
Reserved Matters
Management Rights
Dividend Policy
Information Rights
Non-Competition
Non-Solicitation
Confidentiality
Anti-Dilution
Exit Rights
Deadlock Resolution
Default
Termination
Dispute Resolution
Governing Law
Assignment
Notices
Force Majeure
Severability
Entire Agreement
Amendment
Costs
Third Party Rights
Further Assurance
Counterparts
Language
Good Faith
Compliance with Laws
Shareholder Loans
Share Valuation
Islamic Finance Compliance
UAE Local Partner Rights
Foreign Ownership Provisions
Relevant Industries

Technology

Real Estate

Manufacturing

Healthcare

Retail

Financial Services

Professional Services

Construction

Hospitality

Energy

Trading

E-commerce

Education

Media and Entertainment

Logistics

Relevant Teams

Legal

Corporate Governance

Executive Leadership

Finance

Compliance

Corporate Affairs

Investment

Business Development

Board Secretariat

Risk Management

Relevant Roles

Chief Executive Officer

Chief Legal Officer

Chief Financial Officer

Legal Director

Corporate Secretary

Managing Director

Investment Manager

Board Member

General Counsel

Compliance Officer

Corporate Governance Officer

Business Development Director

Company Secretary

Partner

Shareholder Relations Manager

Industries
UAE Federal Law No. 32 of 2021 (Commercial Companies Law): The primary legislation governing corporate entities in the UAE, including shareholder rights, corporate governance, and company formation requirements
UAE Federal Law No. 5 of 1985 (Civil Code): Governs contractual relationships and obligations, providing the legal framework for MOUs and agreements
UAE Federal Decree-Law No. 19 of 2018 (FDI Law): Regulates foreign direct investment in UAE companies and the percentage of foreign ownership allowed in various sectors
SCA Board of Directors' Resolution No. (3/R.M) of 2020: Concerning Approval of Joint Stock Companies Governance Guide - crucial for shareholder rights and corporate governance standards
UAE Federal Law No. 4 of 2000: Law concerning the Emirates Securities and Commodities Authority (ESCA) and Market, relevant for public shareholding companies
UAE Federal Law No. 2 of 2015: Commercial Companies Law amendments regarding corporate governance and shareholder protection
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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