A Stock Buy Back Agreement is a crucial document used when a UAE company wishes to repurchase its own shares from existing shareholders. This type of agreement is particularly relevant in scenarios such as corporate restructuring, excess cash utilization, or shareholder exit arrangements. The document must strictly comply with UAE Commercial Companies Law, particularly Federal Decree-Law No. 32 of 2021, which sets specific requirements for share buybacks, including maintaining minimum capital requirements and obtaining necessary approvals. The agreement covers essential elements such as purchase price, payment terms, conditions precedent, completion mechanics, and warranties, while ensuring compliance with both mainland UAE and free zone regulations where applicable. It's commonly used by both private and public companies, though public companies face additional Securities and Commodities Authority (SCA) requirements.
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1. Parties: Identification of the company and the selling shareholder(s)
2. Background: Context of the agreement, including company details, share ownership, and reason for buyback
3. Definitions: Key terms used throughout the agreement
4. Sale and Purchase: Core terms of the buyback including number of shares, price, and payment terms
5. Conditions Precedent: Requirements to be met before the buyback can proceed, including regulatory approvals
6. Completion: Process and requirements for closing the transaction
7. Seller's Warranties: Representations regarding share ownership, authority to sell, and absence of encumbrances
8. Company's Warranties: Representations regarding authority to purchase and compliance with laws
9. Confidentiality: Obligations regarding non-disclosure of transaction details
10. Notices: Process for formal communications between parties
11. Governing Law and Jurisdiction: Specification of UAE law and relevant courts
12. General Provisions: Standard boilerplate clauses including severability, entire agreement, and amendments
1. Tax Provisions: Specific arrangements for handling tax implications, used when tax considerations are material to the transaction
2. Regulatory Compliance: Additional provisions for listed companies or regulated entities, used when the company is subject to SCA or other regulatory oversight
3. Shareholder Approval: Details of shareholder approval process, used when specific shareholder approval is required
4. Post-Completion Obligations: Ongoing obligations after completion, used when there are continuing obligations
5. Non-Competition: Restrictions on seller's future activities, used when seller is a significant shareholder or has operational involvement
6. Free Zone Provisions: Additional requirements for free zone companies, used when the company is established in a free zone
1. Share Details: Detailed description of shares being purchased including share certificates numbers and class of shares
2. Completion Requirements: Checklist of documents and actions required for completion
3. Form of Transfer Instrument: Template share transfer forms required by UAE law
4. Corporate Approvals: Copies of relevant board and shareholder resolutions
5. Regulatory Approvals: Copies of required regulatory consents and approvals
6. Calculation of Purchase Price: Details of share valuation and price calculation methodology
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