Simple Agreement For Future Equity Term Sheet Template for United Arab Emirates

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Key Requirements PROMPT example:

Simple Agreement For Future Equity Term Sheet

"I need a Simple Agreement For Future Equity Term Sheet for my Dubai-based fintech startup, seeking investment of AED 2 million with a 20% discount rate, to be completed by March 2025, ensuring compliance with DIFC regulations and including specific provisions for foreign investor protection."

Document background
The Simple Agreement For Future Equity Term Sheet is a crucial document in the UAE startup ecosystem, designed to streamline early-stage investment processes while ensuring compliance with UAE corporate and securities laws. This document is typically used when a startup is seeking investment but prefers to defer valuation discussions until a future equity funding round. It outlines the fundamental terms of the investment, including the investment amount, valuation cap, discount rate, and conversion mechanics, while considering UAE-specific requirements such as foreign ownership restrictions and free zone regulations. The term sheet serves as a preliminary agreement that will form the basis for the final SAFE documentation, making it essential for both investors and startups to understand and negotiate its terms effectively.
Suggested Sections

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

2. Background: Brief context of the proposed investment and purpose of the SAFE agreement

3. Definitions: Key terms used throughout the term sheet, including 'Equity Financing', 'Liquidity Event', 'Valuation Cap', and 'Discount Rate'

4. Investment Amount: Specified amount to be invested under the SAFE agreement

5. Investment Mechanics: Details of how and when the investment will be made, including payment method and timing

6. Conversion Terms: Conditions and mechanics for converting the investment into equity, including valuation cap and/or discount rate

7. Company Representations: Key representations about the company's legal status, authority, and compliance with UAE laws

8. Investor Rights: Basic rights granted to the investor, including information rights and participation rights in future rounds

9. UAE Compliance: Specific provisions ensuring compliance with UAE corporate and investment laws

10. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant courts for dispute resolution

Optional Sections

1. Foreign Investment Provisions: Additional provisions required when the investor is foreign, addressing FDI regulations and ownership restrictions

2. Free Zone Specific Terms: Special provisions applicable when the company is established in a UAE free zone

3. Shariah Compliance: Additional provisions ensuring the agreement is Shariah-compliant, if required by the parties

4. Most Favored Nation: Provision ensuring the investor receives the benefit of more favorable terms offered to other SAFE investors

5. Pro-rata Rights: Rights of the investor to participate in future funding rounds

6. Board Observer Rights: Rights of the investor to appoint a board observer, if investment size warrants

7. Confidentiality Provisions: Detailed confidentiality terms if standard provisions are insufficient

Suggested Schedules

1. Cap Table: Current capitalization table of the company showing existing shareholding structure

2. Investment Terms Summary: Summary of key investment terms including valuation cap, discount rate, and any specific conversion mechanics

3. Corporate Documents: List of key corporate documents including trade license, memorandum of association, and other relevant registrations

4. Disclosure Schedule: Any specific disclosures or exceptions to the representations made in the term sheet

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
Relevant Industries

Technology

Financial Services

E-commerce

Healthcare

Education Technology

Clean Technology

Artificial Intelligence

Blockchain

Software Development

Digital Media

Biotechnology

Real Estate Technology

Financial Technology

Internet of Things

Cybersecurity

Relevant Teams

Legal

Finance

Executive Leadership

Corporate Development

Investment

Compliance

Business Development

Corporate Secretariat

Risk Management

Strategy

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Investment Manager

Venture Capital Associate

Corporate Lawyer

Investment Analyst

Startup Founder

Managing Director

Legal Counsel

Company Director

Investment Director

Business Development Manager

Corporate Secretary

Compliance Officer

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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