Private Token Sale Agreement Template for the United Arab Emirates

A Private Token Sale Agreement is a legally binding contract that governs the sale of digital tokens between an issuer and specific investors in the United Arab Emirates. This document ensures compliance with the UAE's comprehensive virtual asset regulatory framework while protecting the interests of both token issuers and purchasers in private sale transactions.

When do you need this document?

You need this agreement when conducting private token sales to accredited investors or institutional buyers in the UAE. This includes situations where blockchain projects seek early-stage funding through token pre-sales, when established companies tokenize assets or services for select investors, or when international projects want to raise capital from UAE-based investors. The document is essential for any private token offering that involves UAE residents or entities, regardless of where the issuing company is incorporated. It's particularly crucial for projects seeking VARA licensing or operating under Dubai's virtual asset regulatory framework.

Key legal considerations

The agreement must address several critical legal elements to ensure enforceability and regulatory compliance. Token specifications and technical details must be clearly defined, including blockchain protocols, utility functions, and any restrictions on token transfers. Purchase terms should specify payment methods, token allocation schedules, and vesting periods if applicable. Risk disclosure sections are mandatory and must comprehensively outline potential losses, regulatory changes, and technical risks. The agreement should include robust representations and warranties from both parties, indemnification clauses, and dispute resolution mechanisms. Anti-money laundering provisions are essential, requiring detailed KYC procedures and ongoing compliance monitoring.

Legal requirements in United Arab Emirates

UAE law requires strict adherence to multiple regulatory frameworks for token sales. Under UAE Federal Decree-Law No. 20 of 2018, comprehensive AML and CTF compliance procedures must be implemented, including enhanced due diligence for high-risk investors. Dubai Law No. 4 of 2022 establishes VARA's authority over virtual asset activities, requiring specific licensing and operational standards for token issuers. The agreement must comply with UAE Federal Law No. 5 of 1985 regarding general contract principles and include data protection measures under Federal Decree-Law No. 45 of 2021. Token issuers must implement proper investor suitability assessments, maintain detailed transaction records, and ensure all marketing materials comply with VARA guidelines. The agreement should specify governing law, jurisdiction for disputes, and compliance with both federal and emirate-specific regulations.