50 50 Partnership Agreement Template for Saudi Arabia

A 50 50 Partnership Agreement is a legally binding contract that establishes an equal business partnership between two parties under Saudi Arabian law. This document ensures both partners maintain equal ownership, control, and decision-making authority while sharing profits, losses, and responsibilities proportionally. The agreement provides a comprehensive framework for your business relationship and must comply with Saudi Companies Law, Sharia principles, and relevant commercial regulations.

When do you need this document?

You need a 50 50 Partnership Agreement when establishing an equal business venture with another individual or entity in Saudi Arabia. This includes situations where you're launching a joint venture with a Saudi national partner to meet foreign investment requirements, forming a professional services partnership with equal expertise contributions, or creating a family business structure with equal inheritance rights. The document is also essential when foreign investors partner with local entities, technology companies collaborate on equal terms, or when two established businesses merge their operations under shared ownership and management.

Key legal considerations

Your partnership agreement must address several critical legal elements to ensure enforceability under Saudi law. Capital contribution clauses must specify each partner's initial investment, whether financial, intellectual property, or assets, and outline procedures for future capital requirements. Profit and loss distribution mechanisms should align with Sharia principles, avoiding interest-based arrangements and ensuring transparent accounting practices. Management structure provisions must define decision-making processes, operational responsibilities, and authority limits for each partner. The agreement should include comprehensive dispute resolution clauses specifying arbitration procedures and applicable Saudi commercial court jurisdiction. Exit strategy provisions are crucial, covering voluntary withdrawal, death, incapacity, and breach of contract scenarios while protecting both parties' interests.

Legal requirements in Saudi Arabia

Saudi Arabian partnership agreements must comply with the Companies Law (2015), which governs partnership formation, registration, and operational requirements. Your agreement must respect Sharia law principles, particularly prohibitions against riba (interest), gharar (excessive uncertainty), and requirements for ethical business conduct. Foreign partners must satisfy Foreign Investment Law requirements, including minimum capital thresholds and sector-specific restrictions. The partnership must register with the Saudi Authority for Data and Artificial Intelligence (SADAIA) and obtain necessary commercial licenses from relevant ministries. Additionally, your agreement should incorporate Commercial Courts Law provisions for dispute resolution and specify compliance with Saudi Arabian Monetary Authority (SAMA) regulations if your business involves financial services. All documentation must be in Arabic or officially translated, and the agreement should designate Saudi Arabia as the governing jurisdiction for legal matters.