Founders Service Agreement Template for the United Arab Emirates

A Founders Service Agreement is a specialized legal document that formalizes the relationship between company founders and their business entity in the United Arab Emirates. Unlike traditional employment contracts, this agreement recognizes the unique dual role of founders as both equity holders and service providers, ensuring compliance with UAE Federal Law No. 32 of 2021 (Companies Law) and Federal Law No. 33 of 2021 (Labor Law).

When do you need this document?

You need a Founders Service Agreement when establishing a new company in the UAE, whether in mainland jurisdictions or free zones like DIFC, ADGM, or RAKEZ. This document becomes crucial when multiple founders are involved and you need to clarify roles, responsibilities, and compensation structures. It's particularly important for tech startups, consulting firms, and innovative businesses where intellectual property creation is central to operations. The agreement is also essential when seeking investment, as investors typically require clear documentation of founder relationships and commitment levels before proceeding with funding rounds.

Key legal considerations

Your Founders Service Agreement must address several critical legal elements to ensure enforceability under UAE law. Intellectual property clauses are paramount, clearly stating that all work-related creations belong to the company and comply with UAE IP laws. Compensation structures must distinguish between salary, equity participation, and performance bonuses while adhering to UAE Labor Law minimum requirements. Non-compete and confidentiality provisions require careful drafting to be enforceable under UAE Commercial Transactions Law. The agreement should also include detailed termination procedures, specifying how equity vesting accelerates or ceases upon departure, and establishing clear dispute resolution mechanisms preferably through UAE courts or approved arbitration centers.

Legal requirements in United Arab Emirates

Under UAE law, your Founders Service Agreement must comply with specific jurisdictional requirements depending on your company's location. For mainland UAE companies, the agreement must align with Federal Law No. 32 of 2021, ensuring founder appointments are properly documented and approved by the board of directors. Free zone companies must additionally comply with their specific free zone authority requirements, which may have different employment and corporate governance standards. The document requires proper execution with authorized signatories and may need notarization or attestation depending on your company's structure. All compensation arrangements must comply with UAE Labor Law provisions regarding working hours, leave entitlements, and end-of-service benefits, even for founder-employees. Additionally, any equity arrangements must be consistent with your company's articles of association and UAE shareholding regulations.