Advisory Shares Agreement Template for the United Arab Emirates

An Advisory Shares Agreement is a specialized legal contract that allows your UAE company to grant equity compensation to advisors in exchange for their expertise and guidance. This document creates a structured framework for the advisory relationship while ensuring compliance with UAE Federal Law No. 32 of 2021 and relevant securities regulations. The agreement protects both your company's interests and the advisor's rights while establishing clear expectations for the advisory engagement.

When do you need this document?

You need an Advisory Shares Agreement when your UAE company wants to engage experienced professionals as advisors without providing immediate cash compensation. This is particularly common for startups and growth-stage companies that need strategic guidance but prefer to conserve cash flow. The document is essential when you're seeking advisors with specific industry expertise, international market knowledge, or technical skills that could significantly impact your company's growth trajectory. It's also required when your board of directors has approved equity-based advisor compensation as part of your talent acquisition strategy.

Key legal considerations

Several critical legal elements must be carefully addressed in your Advisory Shares Agreement. The vesting schedule determines when advisors can exercise their rights to shares, typically ranging from one to four years with cliff periods to ensure continued engagement. Confidentiality clauses protect your company's sensitive information and trade secrets throughout and after the advisory relationship. Intellectual property provisions ensure that any innovations or improvements developed during the advisory period belong to your company. Termination clauses outline circumstances under which the agreement can be ended and what happens to unvested shares. You must also include clear definitions of advisory services expected and performance milestones that trigger vesting.

Legal requirements in United Arab Emirates

Under UAE Federal Law No. 32 of 2021, your company must obtain proper board authorization before issuing advisory shares, and any share issuance must comply with your company's articles of association. The Securities and Commodities Authority regulations may apply depending on your company structure and whether shares will be publicly traded. You must ensure compliance with UAE Labor Law provisions if the advisory relationship includes service elements that could be construed as employment. The agreement must be executed in accordance with UAE Civil Code contract principles, including proper offer, acceptance, and consideration. Additionally, any foreign advisors may need to comply with UAE residence and work permit requirements depending on the scope of their engagement and physical presence in the UAE.