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Equity Ownership Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that establishes the terms and conditions for the sale, purchase, and ownership of shares in a UAE company. This document outlines the rights and obligations of shareholders, corporate governance structures, share transfer mechanisms, and other key provisions in accordance with UAE Federal Law No. 32 of 2021 (Companies Law) and related regulations. The agreement includes specific provisions for shareholder protection, decision-making processes, and dispute resolution mechanisms while ensuring compliance with UAE foreign ownership restrictions and beneficial ownership disclosure requirements.

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What is a Equity Ownership Agreement?

The Equity Ownership Agreement is a crucial document used in the UAE for structuring and documenting share ownership arrangements in companies. It is essential for transactions involving the transfer of company ownership, establishment of new business ventures, or reorganization of existing shareholding structures. The agreement must comply with UAE Federal Law No. 32 of 2021 and related regulations, including foreign ownership restrictions and economic substance requirements. This document typically includes detailed provisions on share transfer mechanics, shareholder rights and obligations, corporate governance, profit distribution, and exit mechanisms. The Equity Ownership Agreement is particularly important in the UAE context due to specific local requirements regarding beneficial ownership disclosure, foreign investment regulations, and the need to consider both mainland and free zone jurisdictional requirements.

What sections should be included in a Equity Ownership Agreement?

1. Parties: Identification of all parties to the agreement, including full legal names and registration details

2. Background: Recitals explaining the context of the agreement and the parties' intentions

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Sale and Purchase of Shares: Core terms of the equity transfer including number of shares, price, and payment terms

5. Completion: Conditions precedent, completion mechanics, and timing of the transfer

6. Warranties and Representations: Standard warranties from both seller and purchaser regarding capacity, authority, and ownership

7. Corporate Governance: Management structure, board composition, and voting rights

8. Shareholder Rights and Obligations: Key rights and obligations of shareholders including voting and dividend rights

9. Transfer Restrictions: Limitations on future share transfers and pre-emptive rights

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

11. Confidentiality: Obligations regarding confidential information and trade secrets

12. Dispute Resolution: Mechanism for resolving disputes, including jurisdiction and governing law

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

What sections are optional to include in a Equity Ownership Agreement?

1. Tag-Along and Drag-Along Rights: Include when minority shareholder protection or exit mechanisms are required

2. Share Valuation: Include when there's a need for specific methodology for future share valuations

3. Non-Competition and Non-Solicitation: Include when protecting business interests from departing shareholders

4. Intellectual Property Rights: Include when IP ownership or licensing is relevant to the equity transaction

5. External Financing: Include when the purchase is partially financed by external sources

6. Employee Share Scheme: Include when the agreement involves employee share ownership

7. Put and Call Options: Include when parties want future purchase/sale rights

8. Dividend Policy: Include when specific dividend distribution rules are needed

9. Dead-Lock Resolution: Include when equal ownership situations require specific resolution mechanisms

What schedules should be included in a Equity Ownership Agreement?

1. Share Capital and Shareholding Structure: Details of current and post-completion shareholding structure

2. Completion Requirements: Detailed list of documents and actions required for completion

3. Warranties: Detailed warranties given by the sellers regarding the company and shares

4. Company Information: Key company details including assets, contracts, and financial information

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

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

7. Share Transfer Procedures: Detailed procedures for implementing share transfers

8. Deed of Adherence: Template for new shareholders to accede to the agreement

9. Anti-Money Laundering Documentation: Required AML and KYC documentation 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

Publisher

Genie AI

Document Type

Equity Agreement

Cost

Free to use

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