Preferred Stock Purchase Agreement for United Arab Emirates

Preferred Stock Purchase Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE law that documents the terms and conditions under which investors purchase preferred shares in a UAE company. This agreement outlines the rights, preferences, and privileges attached to the preferred shares, including voting rights, dividend preferences, liquidation preferences, and conversion rights. It incorporates specific provisions to comply with UAE Commercial Companies Law and relevant securities regulations, while establishing investor protections and corporate governance mechanisms suitable for the UAE legal framework.

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What is a Preferred Stock Purchase Agreement?

The Preferred Stock Purchase Agreement is a crucial document used when a UAE company seeks to raise capital by issuing preferred shares to investors. This agreement is particularly relevant for growth-stage companies looking to secure institutional investment while maintaining specific control and governance structures. It must comply with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and related regulations, making it distinct from similar agreements in other jurisdictions. The document typically includes detailed provisions about share rights, corporate governance, investor protections, and transfer restrictions, while accounting for specific UAE requirements regarding foreign ownership and local sponsorship where applicable. The agreement serves as the primary transaction document in preferred stock financing rounds, setting forth all material terms of the investment including valuation, board rights, and protective provisions.

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

1. Parties: Identification of the Company, the Investors, and any other relevant parties to the agreement

2. Background: Context of the transaction, including company status and purpose of the investment

3. Definitions: Defined terms used throughout the agreement

4. Purchase and Sale of Preferred Stock: Core transaction terms including number of shares, price per share, and aggregate purchase amount

5. Closing; Delivery: Closing mechanics, conditions, and delivery requirements

6. Representations and Warranties of the Company: Company's statements about its legal status, financial condition, and business

7. Representations and Warranties of the Investors: Investors' statements about their capacity and authority to invest

8. Covenants: Ongoing obligations of the parties post-closing

9. Rights, Preferences and Privileges: Specific rights attached to the preferred shares

10. Registration Rights: Rights related to future registration of shares for public trading

11. Board Composition: Governance provisions and board representation rights

12. Protective Provisions: Special voting rights and veto matters for preferred shareholders

13. Information Rights: Investor rights to receive financial and other company information

14. Transfer Restrictions: Limitations on share transfers and exceptions

15. Drag-Along and Tag-Along Rights: Rights in case of company sale or share transfers

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

17. Miscellaneous: Standard legal provisions including governing law, notices, amendments, etc.

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

1. Anti-dilution Protection: Protection against future down rounds, used when investors require specific price protection

2. Preemptive Rights: Right to participate in future financing rounds, included when investors want to maintain their ownership percentage

3. Redemption Rights: Right to require the company to repurchase shares, included for more conservative investors

4. Dividend Rights: Specific dividend provisions, included when preferred shares carry dividend rights

5. Conversion Rights: Rights to convert preferred shares to common shares, optional if shares are non-convertible

6. Employee Matters: Provisions regarding employee stock options and hiring, included when relevant to the investment

7. UAE Local Ownership Compliance: Specific provisions ensuring compliance with UAE ownership requirements, needed for certain regulated industries

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

1. Schedule A - Schedule of Investors: Detailed list of investors, investment amounts, and share allocations

2. Schedule B - Company Capitalization: Pre and post-money capitalization table

3. Schedule C - Company Disclosure Schedule: Exceptions to company representations and warranties

4. Schedule D - Key Employees: List of key employees and their positions

5. Schedule E - Existing Shareholders: List of current shareholders and their holdings

6. Appendix A - Form of Investors' Rights Agreement: Standard form agreement detailing investors' rights

7. Appendix B - Articles of Association Amendments: Required amendments to company's articles to reflect new rights

8. Appendix C - Board Resolutions: Form of board resolutions approving the transaction

9. Appendix D - Legal Opinion: Form of legal opinion from company's counsel

10. Appendix E - Management Rights Letter: Form of management rights letter for major investors

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

Real Estate

Manufacturing

Renewable Energy

Professional Services

Media and Entertainment

Logistics

Retail

Hospitality

Industrial

Consumer Goods

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Executive Leadership

Investment

Corporate Governance

Risk Management

Treasury

Investor Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Secretary

Investment Director

Managing Director

Board Member

Legal Counsel

Investment Manager

Compliance Officer

Finance Director

Company Director

Corporate Lawyer

Investment Banker

Venture Capital Partner

Private Equity Manager

Chief Legal Officer

Chief Investment Officer

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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