Division Agreement for United Arab Emirates

Division Agreement Template for United Arab Emirates

A comprehensive legal document governed by UAE law that facilitates the division of a company into two or more separate entities. This agreement outlines the terms and conditions for separating business operations, assets, liabilities, employees, and other obligations between the resulting entities. It ensures compliance with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and other relevant UAE regulations, while providing a clear framework for the division process, including transition arrangements, asset allocation, and ongoing obligations between the separated entities.

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What is a Division Agreement?

The Division Agreement is a crucial document used when a company operating in the UAE decides to split its business into two or more separate entities. This type of restructuring may be motivated by various factors including business optimization, risk management, or strategic realignment. The agreement, governed by UAE law, particularly Federal Law No. 32 of 2021, provides a comprehensive framework for the division process. It addresses essential aspects such as asset and liability distribution, employee transfers, contractual obligations, and regulatory compliance. The document is particularly important in the UAE context due to specific local requirements regarding corporate restructuring, ownership structures, and commercial regulations.

What sections should be included in a Division Agreement?

1. Parties: Identification of all parties involved in the division agreement, including the parent company and resulting entities

2. Background: Context of the division, including the current business structure and reasons for division

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

4. Division Structure: Detailed explanation of how the business will be divided, including corporate structure changes

5. Asset Allocation: Principles and methodology for dividing and transferring assets

6. Liability Distribution: Assignment and handling of existing liabilities between the divided entities

7. Employee Matters: Treatment of employees, including transfers, benefits, and related obligations

8. Financial Arrangements: Financial terms, including division of accounts, cash, and financial obligations

9. Transition Period: Management of operations during the transition period

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

11. Indemnification: Mutual indemnification provisions and liability protection

12. Governing Law and Jurisdiction: Specification of UAE law application and jurisdiction

13. Dispute Resolution: Procedures for handling disputes between parties

14. General Provisions: Standard boilerplate provisions including notices, amendments, and severability

What sections are optional to include in a Division Agreement?

1. Intellectual Property Rights: Division of IP assets and licensing arrangements, used when significant IP assets exist

2. Real Estate: Specific provisions for division of real estate assets, used when property holdings are involved

3. International Operations: Provisions dealing with international aspects of the business, used for companies with overseas operations

4. Tax Matters: Detailed tax planning and allocation provisions, used when significant tax implications exist

5. Government Approvals: Process for obtaining necessary governmental approvals, used in regulated industries

6. Customer and Supplier Contracts: Handling of existing commercial relationships, used when significant contracts need to be divided

7. Post-Division Cooperation: Framework for ongoing cooperation between divided entities, used when continued interaction is necessary

8. Non-Competition: Restrictions on competition between divided entities, used when market overlap exists

What schedules should be included in a Division Agreement?

1. Schedule 1 - Asset Register: Comprehensive list of all assets being divided

2. Schedule 2 - Employee Transfer List: Details of employees being transferred to each entity

3. Schedule 3 - Contracts Assignment: List of contracts being assigned to each entity

4. Schedule 4 - Intellectual Property Register: Detailed list of IP assets and their allocation

5. Schedule 5 - Real Estate Properties: List of real estate assets and their allocation

6. Schedule 6 - Financial Statements: Recent financial statements and division of accounts

7. Schedule 7 - Transition Services: Details of services to be provided during transition

8. Appendix A - Corporate Structure Charts: Pre and post-division corporate structure diagrams

9. Appendix B - Government Approvals: List of required governmental and regulatory approvals

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

Publisher

Genie AI

Cost

Free to use
Clauses
Relevant Industries

Manufacturing

Retail

Technology

Financial Services

Real Estate

Construction

Healthcare

Energy

Telecommunications

Professional Services

Hospitality

Transportation and Logistics

Media and Entertainment

Relevant Teams

Legal

Finance

Human Resources

Operations

Compliance

Risk Management

Corporate Strategy

Treasury

Asset Management

Board Secretariat

Internal Audit

Corporate Communications

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Chief Operating Officer

Corporate Secretary

General Counsel

Head of Human Resources

Head of Strategy

Financial Controller

Compliance Officer

Risk Manager

Business Unit Directors

Corporate Restructuring Manager

Merger & Acquisition Director

Treasury Manager

Asset Manager

Operations Director

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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