Business Percentage Agreement for Saudi Arabia

Business Percentage Agreement Template for Saudi Arabia

A comprehensive legal document governed by Saudi Arabian law that establishes and regulates a percentage-based business arrangement between two or more parties. The agreement defines the calculation, distribution, and payment of business revenues or profits based on agreed percentages, while ensuring compliance with Saudi commercial regulations and Sharia principles. It includes detailed provisions for financial reporting, operational responsibilities, compliance requirements, and dispute resolution mechanisms specific to the Saudi Arabian jurisdiction.

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What is a Business Percentage Agreement?

The Business Percentage Agreement is a crucial document used in Saudi Arabian business transactions where parties agree to share revenues, profits, or other business proceeds based on predetermined percentages. This document is particularly relevant when establishing commission-based arrangements, profit-sharing partnerships, or revenue-sharing schemes in compliance with Saudi law and Sharia principles. The agreement typically specifies calculation methodologies, payment terms, reporting requirements, and operational responsibilities while addressing local regulatory requirements including Commercial Court Law, Companies Law, and relevant SAMA regulations. It's commonly used in distribution agreements, agency relationships, joint ventures, and various other business arrangements where percentage-based compensation or profit sharing is a key component.

What sections should be included in a Business Percentage Agreement?

1. Parties: Identification of all parties to the agreement, including full legal names, addresses, and registration details

2. Background: Context of the agreement, business relationship overview, and purpose of the arrangement

3. Definitions: Detailed definitions of key terms used throughout the agreement, including financial and technical terms

4. Scope of Agreement: Detailed description of the business arrangement and activities covered under the agreement

5. Percentage Structure: Clear definition of the percentage split, calculation methodology, and basis for determinations

6. Payment Terms: Details of payment calculations, timing, currency, and payment methods in compliance with Saudi banking regulations

7. Reporting Requirements: Specifications for financial reporting, audit rights, and documentation requirements

8. Obligations of Parties: Detailed responsibilities and obligations of each party in the business arrangement

9. Term and Termination: Duration of the agreement, renewal terms, and conditions for termination

10. Confidentiality: Provisions for protecting confidential information and trade secrets

11. Compliance: Requirements for compliance with Saudi laws, including commercial regulations and Sharia principles

12. Dispute Resolution: Procedures for resolving disputes, including jurisdiction and applicable law provisions

13. General Provisions: Standard legal provisions including notices, amendments, and entire agreement clauses

What sections are optional to include in a Business Percentage Agreement?

1. Intellectual Property Rights: Required when the business arrangement involves the use or creation of intellectual property

2. Non-Competition: Include when parties need to be restricted from competing activities

3. Force Majeure: Include specific provisions for unforeseen circumstances affecting performance

4. Insurance Requirements: Include when specific insurance coverage is necessary for the business activities

5. Training and Support: Required when one party needs to provide operational support or training

6. Marketing and Branding: Include when the agreement involves joint marketing or brand usage

7. Territory Restrictions: Include when the agreement is limited to specific geographic areas

8. Minimum Performance Requirements: Include when specific performance targets need to be met to maintain the agreement

What schedules should be included in a Business Percentage Agreement?

1. Schedule 1 - Calculation Methodology: Detailed explanation of how percentages are calculated, including formulas and examples

2. Schedule 2 - Reporting Templates: Standard formats for required financial and operational reports

3. Schedule 3 - Key Performance Indicators: Specific metrics and targets for measuring business performance

4. Schedule 4 - Operating Procedures: Detailed procedures for day-to-day operations and collaboration

5. Schedule 5 - Compliance Checklist: List of regulatory requirements and compliance procedures

6. Appendix A - Contact Details: List of key contacts and their roles for both parties

7. Appendix B - Required Documentation: List of documents required for regulatory compliance and operations

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

Jurisdiction

Saudi Arabia

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Retail

Manufacturing

Technology

Professional Services

Distribution

Trading

Real Estate

Construction

Healthcare

Education

Hospitality

Telecommunications

Energy

Financial Services

Relevant Teams

Legal

Finance

Commercial

Business Development

Operations

Sales

Compliance

Risk Management

Corporate Strategy

Partner Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Commercial Director

Business Development Manager

Legal Counsel

Compliance Officer

Finance Manager

Operations Director

Sales Director

Contract Manager

Partnership Manager

Account Executive

Regional Manager

Managing Director

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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