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Share Subscription And Shareholders Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that combines both share subscription elements and shareholders' arrangements. The document regulates the issuance of new shares to investors and establishes the ongoing relationship between all shareholders, including their rights, obligations, and governance framework. It complies with UAE Federal Law No. 32 of 2021 (Companies Law) and other relevant UAE regulations, addressing key aspects such as share transfer restrictions, management rights, exit mechanisms, and protection of minority interests. The agreement is particularly important in the UAE context where specific consideration must be given to local ownership requirements and foreign investment regulations.

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What is a Share Subscription And Shareholders Agreement?

The Share Subscription And Shareholders Agreement is a crucial document used in UAE corporate transactions when new investors are joining a company while simultaneously establishing the framework for ongoing shareholder relationships. It is particularly relevant in the UAE context where careful consideration must be given to foreign ownership restrictions, local sponsor requirements, and compliance with Federal Law No. 32 of 2021. The document serves multiple purposes: it details the terms of the share subscription including payment and issuance of shares, establishes corporate governance mechanisms, protects minority shareholder rights, and provides clear exit mechanisms. This agreement is essential for both private and public companies seeking investment while ensuring compliance with UAE regulatory requirements and market practices.

What sections should be included in a Share Subscription And Shareholders Agreement?

1. Parties: Identification of all parties to the agreement including the Company, existing shareholders, and new subscribers

2. Background: Context of the transaction, company information, and purpose of the agreement

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

4. Subscription of Shares: Details of the share subscription including number of shares, price, and payment terms

5. Completion: Conditions precedent, completion obligations, and timing of the share subscription

6. Warranties and Representations: Warranties given by the company, existing shareholders, and subscribers

7. Management and Control: Board composition, appointment rights, and management structure

8. Shareholder Meetings: Procedures for shareholder meetings, voting rights, and reserved matters

9. Transfer of Shares: Share transfer restrictions, pre-emptive rights, and right of first refusal

10. Tag and Drag Rights: Co-sale rights and forced sale provisions

11. Exit Provisions: Mechanisms for exit including IPO, put options, and sale processes

12. Confidentiality: Obligations regarding confidential information

13. Non-Competition and Non-Solicitation: Restrictions on competitive activities and employee solicitation

14. Term and Termination: Duration of the agreement and termination provisions

15. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law

What sections are optional to include in a Share Subscription And Shareholders Agreement?

1. Anti-Dilution Rights: Protection for investors against future dilution - used when investors require specific protection

2. Intellectual Property Rights: IP ownership and protection provisions - relevant for technology or IP-heavy companies

3. Dividend Policy: Specific dividend distribution requirements - used when parties want predetermined dividend arrangements

4. Dead Lock Resolution: Mechanisms to resolve shareholder disputes - important for 50/50 joint ventures

5. Information Rights: Special information access rights - relevant for minority shareholders requiring enhanced protection

6. Employee Share Scheme: Provisions for employee share ownership - used when company plans to implement ESOP

7. Islamic Finance Compliance: Specific provisions ensuring Shariah compliance - required for Islamic finance structures

8. Local Partner Provisions: Specific provisions for local ownership requirements - needed for certain regulated industries

What schedules should be included in a Share Subscription And Shareholders Agreement?

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

2. Subscription Details: Detailed terms of the share subscription including valuation methodology

3. Company Information: Key company details including corporate registration, licenses, and assets

4. Reserved Matters: List of decisions requiring special approval

5. Business Plan: Initial business plan and key milestones

6. Warranties: Detailed warranties given by various parties

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

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

9. Key Performance Indicators: Agreed performance metrics and targets

10. Completion Obligations: Detailed list of documents and actions required at completion

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

Cost

Free to use

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