Founder Stock Purchase Agreement for United Arab Emirates

Founder Stock Purchase Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that formalizes the purchase of company shares by founding members. This document outlines the terms and conditions of share acquisition, including purchase price, payment terms, representations and warranties, and various rights and obligations of the founders. It ensures compliance with UAE Federal Commercial Companies Law and related regulations, while establishing clear guidelines for share ownership, transfer restrictions, and founder commitments to the company.

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What is a Founder Stock Purchase Agreement?

The Founder Stock Purchase Agreement is a crucial document in the establishment and structuring of companies in the UAE. It is typically used during company formation or early stages when founders are formally acquiring their equity stakes. This agreement, governed by UAE law, details the terms under which founding members purchase their shares, including purchase price, payment mechanisms, vesting schedules (if applicable), and transfer restrictions. The document must comply with UAE Federal Commercial Companies Law and related regulations, particularly regarding share issuance, foreign ownership restrictions, and corporate governance requirements. It serves as a foundational document that helps prevent future disputes by clearly documenting the initial share purchase transaction and establishing the rights and obligations of founding shareholders.

What sections should be included in a Founder Stock Purchase Agreement?

1. Parties: Identification of the Company and the Founder(s) purchasing shares

2. Background: Context of the agreement, including company formation and purpose of share issuance

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale of Shares: Details of the share transaction, including number of shares, price, and class of shares

5. Purchase Price and Payment: Terms of payment, including method, timing, and any installment arrangements

6. Closing and Deliverables: Conditions and requirements for completing the transaction

7. Representations and Warranties of the Company: Company's statements regarding its authority, share status, and legal compliance

8. Representations and Warranties of the Founder: Founder's statements regarding capacity, understanding, and investment intent

9. Restrictions on Transfer: Limitations on the founder's ability to transfer shares

10. Rights and Obligations of the Founder: Specific duties, commitments, and rights of the founder post-purchase

11. Confidentiality: Provisions regarding protection of company information

12. Termination: Circumstances under which the agreement can be terminated

13. Governing Law and Jurisdiction: Specification of UAE law application and dispute resolution procedures

What sections are optional to include in a Founder Stock Purchase Agreement?

1. Vesting Provisions: Include when shares are subject to vesting schedule

2. Right of First Refusal: Include when company or other shareholders should have priority rights to purchase shares

3. Tag-Along Rights: Include when founders should have the right to join in sales to third parties

4. Drag-Along Rights: Include when majority shareholders need the right to force minority shareholders to join in a sale

5. Intellectual Property Assignment: Include when founder is transferring IP rights to the company

6. Non-Competition and Non-Solicitation: Include when founder should be restricted from competing activities

7. Board Representation: Include when founder is to have board appointment rights

8. Pre-emptive Rights: Include when founders should have rights to maintain ownership percentage in future issuances

What schedules should be included in a Founder Stock Purchase Agreement?

1. Share Details: Schedule detailing the number, class, and rights attached to shares being purchased

2. Capitalization Table: Complete breakdown of company's share capital structure pre and post-transaction

3. Vesting Schedule: If applicable, detailed timeline and terms of share vesting

4. Form of Share Certificate: Template of the share certificate to be issued

5. Shareholders' Resolution: Resolution approving the share issuance

6. Deed of Adherence: If applicable, binding founder to existing shareholders' agreement

7. Payment Schedule: If payment is in installments, detailed payment timeline

8. Disclosure Schedule: Exceptions or qualifications to representations and warranties

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

Document Type

Purchase Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Education

Manufacturing

Professional Services

Real Estate

Media and Entertainment

Retail

Telecommunications

Transportation and Logistics

Clean Energy

Food and Beverage

Biotechnology

Relevant Teams

Legal

Corporate Governance

Finance

Executive Leadership

Compliance

Corporate Secretary Office

Business Development

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Founder

Managing Director

Corporate Lawyer

Legal Counsel

Company Secretary

Board Member

Chief Legal Officer

Investment Director

Compliance Officer

Corporate Governance Officer

Business Development Director

Startup Founder

Managing Partner

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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