Co Founder Agreement for Saudi Arabia

Co Founder Agreement Template for Saudi Arabia

A comprehensive legal agreement governed by Saudi Arabian law that establishes the formal relationship between company co-founders, outlining their respective rights, obligations, and responsibilities in accordance with the Saudi Companies Law and related regulations. This document defines critical elements such as equity distribution, capital contributions, management rights, decision-making processes, and exit provisions, while ensuring compliance with local legal requirements including commercial registration and corporate governance standards. It serves as the foundational document for the business relationship, incorporating necessary provisions for Shariah compliance where applicable and addressing specific Saudi Arabian business practices and regulatory requirements.

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What is a Co Founder Agreement?

The Co-Founder Agreement is a crucial document for any business venture in Saudi Arabia where multiple founders are involved in establishing and operating a company. It is particularly relevant in the context of Saudi Arabia's Vision 2030, which has created a more dynamic business environment and encouraged entrepreneurship across various sectors. This agreement needs to comply with Saudi Companies Law, Commercial Registration requirements, and where applicable, Shariah principles. It typically includes detailed provisions on capital contributions, profit sharing, management rights, decision-making processes, and exit mechanisms. The document serves as a foundational contract that helps prevent future disputes by clearly defining each co-founder's roles, responsibilities, and equity stakes while ensuring alignment with Saudi Arabian regulatory requirements and business practices. It's especially important given the increasing number of technology startups and innovative businesses emerging in the Kingdom, as well as traditional family businesses transitioning to more formal corporate structures.

What sections should be included in a Co Founder Agreement?

1. Parties: Identification of all co-founders with full legal names, addresses, and national ID/Iqama numbers as required by Saudi law

2. Background: Context of the agreement, business purpose, and intention of the parties to establish the company

3. Definitions: Key terms used throughout the agreement, including Arabic legal terms where relevant

4. Company Formation: Details of company structure, legal form, and registration requirements under Saudi Companies Law

5. Capital Contribution: Initial capital contributions, valuation of non-cash contributions, and compliance with minimum capital requirements

6. Shareholding Structure: Distribution of shares, share classes, and voting rights among co-founders

7. Roles and Responsibilities: Specific duties, commitments, and authority of each co-founder

8. Decision Making: Governance structure, voting thresholds, and reserved matters

9. Transfer Restrictions: Limitations on share transfers and right of first refusal provisions

10. Non-Compete and Confidentiality: Competitive restrictions and protection of company information

11. Intellectual Property: Ownership and protection of company IP, including pre-existing IP

12. Deadlock Resolution: Procedures for resolving fundamental disagreements

13. Exit Provisions: Terms for founder exit, including good/bad leaver provisions

14. Term and Termination: Duration of agreement and grounds for termination

15. Governing Law and Jurisdiction: Confirmation of Saudi law application and dispute resolution mechanisms

16. General Provisions: Standard boilerplate clauses adapted to Saudi legal requirements

What sections are optional to include in a Co Founder Agreement?

1. External Investment: Terms regarding future investment rounds and investor rights - include when planning to seek external funding

2. Shariah Compliance: Specific provisions ensuring business activities comply with Islamic law - include for specific sectors or upon request

3. Vesting Schedule: Timeline and conditions for share vesting - include when implementing equity incentive structures

4. Family Office Provisions: Special terms for family-owned businesses - include when co-founders represent family interests

5. Technical Services: Specific provisions for technology development and maintenance - include for tech startups

6. International Operations: Terms governing international business activities - include for companies planning global operations

7. Spouse Consent: Approval from spouses regarding share ownership - include when required by personal status

8. Government Relations: Provisions for dealing with government entities - include for regulated industries

What schedules should be included in a Co Founder Agreement?

1. Business Plan: Detailed business strategy and operational plans

2. Initial Capital Contributions: Detailed breakdown of each founder's capital contribution, including valuation of non-cash assets

3. Intellectual Property Register: List of all IP assets brought into or developed for the business

4. Share Capital Structure: Detailed breakdown of shareholding, including any special rights attached to shares

5. Founder CVs: Professional backgrounds and qualifications of co-founders

6. Key Performance Indicators: Metrics for evaluating founder performance and business success

7. Reserved Matters: Comprehensive list of decisions requiring special approval

8. Company Policies: Essential operational and governance policies

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

Cost

Free to use

Relevant legal definitions

Clauses

Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Education

Manufacturing

Real Estate

Professional Services

Retail

Food and Beverage

Digital Media

Consulting

Logistics

Energy

Tourism

Entertainment

Relevant Teams

Legal

Executive Leadership

Board of Directors

Corporate Governance

Strategy

Finance

Business Development

Company Secretariat

Compliance

Risk Management

Relevant Roles

Founder

Co-Founder

Chief Executive Officer

Managing Director

Chief Technology Officer

Chief Financial Officer

Chief Operating Officer

Business Development Director

Legal Counsel

Company Secretary

Board Member

Chairman

Vice President

Head of Strategy

Chief Innovation Officer

Investment Manager

Partner

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What is a Co Founder Agreement?

What sections should be included in a Co Founder Agreement?

What sections are optional to include in a Co Founder Agreement?

What schedules should be included in a Co Founder Agreement?

Authors

Alex Denne

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