Cross Purchase Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Cross Purchase Agreement

"I need a Cross Purchase Agreement for a UAE-based technology consulting firm with 5 equal shareholders, including mandatory life insurance provisions and a specific valuation formula based on 3x annual EBITDA, with the agreement to be effective from March 1, 2025."

What is a Cross Purchase Agreement?

The Cross Purchase Agreement is a crucial document for businesses operating in the United Arab Emirates, particularly those structured as private companies or partnerships. It serves as a risk management tool by providing a clear framework for ownership transitions when a business owner exits, whether through retirement, death, disability, or voluntary departure. The agreement must align with UAE Federal Law No. 32 of 2021 and related commercial regulations, while potentially incorporating Sharia-compliant elements. It typically includes detailed provisions for valuation, payment mechanisms, and transfer procedures, often supported by life insurance or other funding arrangements. This type of agreement is especially vital for maintaining business continuity and preventing ownership disputes in closely-held UAE companies.

What sections should be included in a Cross Purchase Agreement?

1. Parties: Identification of all current shareholders/partners who are parties to the agreement

2. Background: Context of the agreement, including company details and purpose of the arrangement

3. Definitions: Definitions of key terms used throughout the agreement

4. Purchase Obligation: Core obligations of surviving shareholders to purchase shares of departing shareholder

5. Trigger Events: Events that trigger the purchase obligation (death, disability, retirement, voluntary departure, etc.)

6. Purchase Price and Valuation: Methods for determining the purchase price of shares and valuation procedures

7. Payment Terms: Terms and conditions for payment, including installment provisions if applicable

8. Transfer Procedure: Process and requirements for executing the share transfer

9. Rights and Obligations: Detailed rights and obligations of all parties during the purchase process

10. Insurance Provisions: Requirements for life/disability insurance to fund potential purchase obligations

11. Representations and Warranties: Standard representations and warranties from all parties

12. Confidentiality: Provisions regarding confidential information

13. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction

14. Notices: Process and requirements for giving notices under the agreement

15. General Provisions: Standard boilerplate provisions including amendment, waiver, and severability

What sections are optional to include in a Cross Purchase Agreement?

1. Tag-Along Rights: Include when certain shareholders should have the right to join in a sale of shares

2. Drag-Along Rights: Include when majority shareholders should have the right to force minority shareholders to join in a sale

3. Non-Competition: Include when restrictions on competing business activities are necessary

4. Dispute Resolution: Include when specific arbitration or mediation procedures are preferred over court proceedings

5. Right of First Refusal: Include when existing shareholders should have priority rights to purchase shares before external sale

6. Special Voting Rights: Include when certain decisions require special voting arrangements during the purchase process

7. Tax Provisions: Include when specific tax considerations need to be addressed

8. Family Member Provisions: Include when transfer rights to family members need special treatment

What schedules should be included in a Cross Purchase Agreement?

1. Schedule 1 - Company Information: Detailed information about the company, including registration details and shareholding structure

2. Schedule 2 - Valuation Formula: Detailed methodology for calculating share value

3. Schedule 3 - Insurance Requirements: Specifications for required insurance policies

4. Schedule 4 - Transfer Notice Form: Template for notice of intention to transfer shares

5. Schedule 5 - Deed of Adherence: Template for new shareholders to become bound by the agreement

6. Appendix A - Share Certificate Form: Template for share certificates

7. Appendix B - Board Resolution Templates: Standard form board resolutions for approving transfers

8. Appendix C - Calculation Examples: Examples of purchase price calculations under different scenarios

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
Clauses
Relevant Industries

Professional Services

Manufacturing

Family Businesses

Healthcare

Technology

Consulting

Real Estate

Retail

Construction

Financial Services

Legal Services

Architecture and Engineering

Relevant Teams

Legal

Finance

Corporate Governance

Executive Leadership

Risk Management

Compliance

Corporate Secretariat

Business Development

Shareholder Relations

Relevant Roles

Chief Executive Officer

Managing Director

Company Secretary

Legal Counsel

Chief Financial Officer

Business Owner

Managing Partner

Board Member

Corporate Lawyer

Finance Director

Risk Manager

Compliance Officer

Company Director

Shareholder Relations Manager

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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