Term Sheet For Investors for United Arab Emirates

Term Sheet For Investors Template for United Arab Emirates

A Term Sheet for Investors under UAE law serves as a preliminary document outlining the key terms and conditions of a proposed investment in a company. It provides a framework for negotiation and subsequent definitive agreements while considering UAE-specific requirements, including federal and emirate-level regulations, foreign ownership restrictions, and corporate governance requirements. The document typically includes essential terms such as valuation, investment structure, investor rights, and exit provisions, while remaining largely non-binding except for specific provisions like confidentiality and exclusivity. It must comply with UAE Federal Law No. 32 of 2021 (Companies Law) and other relevant regulations, particularly when involving foreign investors.

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What is a Term Sheet For Investors?

The Term Sheet For Investors is a crucial document in the UAE investment landscape, typically used during the preliminary stages of investment negotiations between companies seeking funding and potential investors. It serves as a roadmap for the investment process, outlining key commercial and legal terms while considering UAE's unique regulatory environment, including both federal laws and free zone regulations. The document is particularly important given the UAE's growing status as a regional investment hub and its recent legislative reforms encouraging foreign investment. While mostly non-binding, it forms the basis for detailed due diligence and definitive agreements, covering essential aspects such as valuation, governance rights, exit mechanisms, and compliance with local regulations. The term sheet must be carefully drafted to ensure alignment with UAE commercial laws, foreign investment regulations, and where applicable, specific emirate-level or free zone requirements.

What sections should be included in a Term Sheet For Investors?

1. Parties: Identification of the Company and the Investor(s), including full legal names and registration details

2. Background: Brief description of the Company, its business, and the purpose of the proposed investment

3. Definitions: Key terms used throughout the term sheet

4. Investment Amount: Proposed investment amount and payment terms

5. Valuation: Pre-money and post-money valuation of the Company

6. Type of Securities: Description of the securities to be issued (e.g., preferred shares, convertible notes)

7. Ownership Structure: Post-investment capitalization table and ownership percentages

8. Board Composition: Proposed structure of the Board of Directors and voting rights

9. Investor Rights: Key rights granted to investors including voting, anti-dilution, and information rights

10. Exit Rights: Provisions regarding liquidation preferences, tag-along, and drag-along rights

11. Confidentiality: Binding provisions regarding confidentiality of discussions and information

12. Exclusivity: Period during which the Company cannot seek other investors

13. Closing Conditions: Key conditions that must be met before the investment is completed

14. Non-Binding Nature: Statement clarifying which provisions are binding and non-binding

What sections are optional to include in a Term Sheet For Investors?

1. Founder Commitments: Used when specific commitments from founders are required, including non-compete and lock-in periods

2. Corporate Governance: Include when specific governance mechanisms beyond standard board composition need to be established

3. Technology Rights: Required for technology companies where IP ownership and licensing needs to be addressed

4. Employee Stock Option Pool: Include when establishing or modifying an ESOP as part of the investment

5. Strategic Rights: Used when strategic investors require specific rights like first right of refusal on products/services

6. Shariah Compliance: Include for investments requiring compliance with Islamic finance principles

7. Free Zone Provisions: Required when the company operates in a UAE free zone with specific regulations

What schedules should be included in a Term Sheet For Investors?

1. Cap Table: Detailed breakdown of current and post-investment shareholding

2. Key Terms Summary: Summary table of main commercial terms for quick reference

3. Corporate Information: Company's corporate details, licenses, and registrations

4. Investment Timeline: Expected timeline for due diligence, documentation, and closing

5. Use of Proceeds: Detailed breakdown of how investment funds will be utilized

6. Key Performance Indicators: Current and projected KPIs of the Company

7. Material Contracts: List of significant contracts and commitments

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
Relevant legal definitions
Clauses
Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Real Estate

Manufacturing

Renewable Energy

Education

Logistics

Food and Beverage

Retail

Media and Entertainment

Artificial Intelligence

Blockchain

Tourism and Hospitality

Professional Services

Relevant Teams

Legal

Finance

Investment

Corporate Development

Compliance

Strategy

Executive Leadership

Board of Directors

Corporate Secretariat

Risk Management

Business Development

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Investment Director

Managing Partner

Legal Counsel

Corporate Lawyer

Investment Manager

Venture Capital Associate

Private Equity Manager

Business Development Director

Company Secretary

Compliance Officer

Fund Manager

Strategy Director

Board Member

Financial Controller

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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