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Preference Share Subscription Agreement

Preference Share Subscription Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Preference Share Subscription Agreement

"I need a Preference Share Subscription Agreement under UAE law for a tech startup issuing Series A preference shares to three venture capital investors, with a total investment of AED 10 million, including 2x liquidation preference and anti-dilution protection."

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Document background
The Preference Share Subscription Agreement is a crucial document used when a UAE company seeks to raise capital by issuing preference shares to investors. This document is particularly relevant in the UAE context where companies must comply with Federal Law No. 32 of 2021 and related regulations regarding share capital and corporate governance. The agreement outlines the terms of the investment, including the number and class of preference shares being issued, the subscription price, and the specific rights attached to these shares. It includes essential provisions required by UAE law regarding share transfers, corporate approvals, and shareholder rights. The document is commonly used in private equity investments, venture capital transactions, and corporate restructurings where investors seek preferential rights over ordinary shareholders.
Suggested Sections

1. Parties: Identification of the Company issuing the preference shares and the Subscriber(s)

2. Background: Context of the transaction, including company details, share capital structure, and purpose of the preference share issuance

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

4. Subscription and Payment: Details of preference shares being subscribed to, subscription price, and payment terms

5. Completion: Conditions precedent, completion mechanics, and timing

6. Preference Share Rights: Dividend rights, voting rights, conversion rights, and other preferential terms

7. Company Warranties: Representations and warranties given by the company regarding its status, authority, and business

8. Subscriber Warranties: Representations and warranties given by the subscriber regarding capacity and authority

9. Covenants: Ongoing obligations of the parties post-completion

10. Transfer Restrictions: Limitations on transfer of preference shares and related procedures

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

12. Confidentiality: Obligations regarding confidential information

13. Notices: Process for giving formal notices under the agreement

14. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement

Optional Sections

1. Anti-dilution Protection: Protection mechanisms for maintaining the subscriber's percentage ownership, used when dealing with sophisticated investors

2. Tag-Along Rights: Rights allowing preference shareholders to join in sale of shares by other shareholders, typically included for minority protection

3. Drag-Along Rights: Rights allowing majority shareholders to force minority shareholders to join in a sale, included when exit possibilities are important

4. IPO Rights: Rights related to future public offerings, included when an IPO is a potential exit strategy

5. Management Rights: Special rights regarding company management, included when investors require operational control

6. Redemption Rights: Terms for redemption of preference shares, included when exit through redemption is contemplated

7. Information Rights: Rights to receive specific company information, included for significant investors

Suggested Schedules

1. Schedule 1 - Share Capital Structure: Details of the company's existing share capital and proposed structure post-subscription

2. Schedule 2 - Subscription Details: Detailed breakdown of preference shares being subscribed to, including price and payment terms

3. Schedule 3 - Conditions Precedent: List of conditions to be satisfied before completion

4. Schedule 4 - Completion Requirements: Documents and actions required at completion

5. Schedule 5 - Company Warranties: Detailed company warranties and any limitations

6. Schedule 6 - Form of Board Resolutions: Template board resolutions approving the share issuance

7. Schedule 7 - Form of Shareholders' Resolution: Template shareholders' resolution approving the share issuance

8. Schedule 8 - Preference Share Terms: Detailed terms and conditions attaching to the preference shares

9. Appendix A - Form of Share Certificate: Template share certificate for the preference shares

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
Companies Law
Company
Completion
Completion Date
Conditions Precedent
Confidential Information
Consideration
Director
Dividend
Encumbrance
Existing Shareholders
Financial Year
Governing Law
Issue Price
Material Adverse Change
Memorandum of Association
Ordinary Shares
Preference Dividend
Preference Rights
Preference Shares
Register of Members
Regulatory Authority
Securities
Share Capital
Shareholder
Subscriber
Subscription Amount
Subscription Shares
UAE
UAE Dirhams
Warranties
Clauses
Share Subscription
Payment Terms
Preference Rights
Dividend Rights
Voting Rights
Conversion Rights
Redemption Rights
Anti-dilution
Pre-emptive Rights
Transfer Restrictions
Tag Along Rights
Drag Along Rights
Representations and Warranties
Conditions Precedent
Completion
Information Rights
Board Appointment Rights
Management Rights
Covenants
Confidentiality
Non-competition
Change of Control
Events of Default
Termination
Assignment
Notices
Governing Law
Dispute Resolution
Force Majeure
Severability
Entire Agreement
Amendment
Costs and Expenses
Relevant Industries

Financial Services

Technology

Real Estate

Manufacturing

Healthcare

Energy

Infrastructure

Retail

Telecommunications

Professional Services

Education

Hospitality

Relevant Teams

Legal

Finance

Corporate Secretariat

Investment

Compliance

Treasury

Corporate Development

Board of Directors

Executive Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Corporate Secretary

Investment Manager

Finance Director

Compliance Officer

Board Director

Investment Analyst

Corporate Governance Officer

Business Development Manager

Treasury Manager

Industries
UAE Federal Law No. 32 of 2021 (Commercial Companies Law): The primary legislation governing companies in the UAE, including provisions for share capital, types of shares, and corporate governance requirements
UAE Federal Law No. 5 of 1985 (Civil Code): Governs general contractual principles and obligations that would apply to the subscription agreement
UAE Federal Law No. 18 of 1993 (Commercial Transactions Law): Regulates commercial transactions and provides framework for commercial contracts and dealings
UAE Securities and Commodities Authority (SCA) Regulations: Relevant for any public offerings or listings of preference shares, including disclosure requirements and investor protection measures
UAE Federal Decree-Law No. 19 of 2018 (Foreign Direct Investment Law): Governs foreign ownership restrictions and permissions in UAE companies
UAE Central Bank Regulations: Relevant for any financial aspects of the share subscription, particularly if involving regulated financial institutions
Free Zone Regulations (if applicable): Specific regulations of the relevant free zone if the company is established in one of the UAE's free zones
UAE Federal Law No. 4 of 2000 (Capital Market Law): Governs securities markets and trading of shares in the UAE
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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