Fee Share Agreement Template for Saudi Arabia

A Fee Share Agreement is a legal contract that governs how professional fees, commissions, or revenue will be distributed between parties who collaborate in providing services or referring business to each other in Saudi Arabia. This document ensures that all fee-sharing arrangements comply with Islamic principles under Sharia Law while meeting the commercial requirements of Saudi Arabian business regulations.

When do you need this document?

You need a Fee Share Agreement when establishing any formal arrangement to split fees or commissions with other professionals or businesses. Law firms commonly use these agreements when collaborating on cases or referring clients to specialists in different practice areas. Financial advisors and investment companies require them when sharing advisory fees or commissions from joint investment products. Real estate brokers use fee share agreements when co-listing properties or sharing transaction commissions. Consulting companies need them when subcontracting work or partnering on large projects that require specialized expertise. Business intermediaries and commercial agents also rely on these agreements to formalize referral fee arrangements and ensure proper compensation for bringing parties together.

Key legal considerations

Your Fee Share Agreement must clearly define the fee calculation methodology, whether based on percentage splits, fixed amounts, or tiered structures tied to performance metrics. The payment terms section should specify when and how payments will be made, including any conditions that must be met before fees are distributed. You must include detailed scope provisions that outline exactly which services or activities are covered by the fee-sharing arrangement to avoid future disputes. Compliance clauses are essential to ensure all parties meet their professional obligations and maintain required licenses or certifications. The agreement should address confidentiality requirements, particularly when sharing client information or proprietary business methods. You'll also need termination provisions that specify how the arrangement can be ended and how outstanding fees will be handled.

Legal requirements in Saudi Arabia

Under Saudi Arabian law, your Fee Share Agreement must comply with Sharia Law principles, which prohibit excessive uncertainty (gharar) and require clear terms for all financial arrangements. The Commercial Courts Law requires that all commercial contracts, including fee-sharing agreements, be properly documented and enforceable under Saudi jurisdiction. You must ensure compliance with the Saudi Arabian Companies Law if the fee-sharing involves corporate entities, particularly regarding profit distribution and internal arrangements. Value Added Tax Law compliance is mandatory, requiring proper VAT treatment of fee-sharing payments and appropriate tax documentation. The Anti-Money Laundering Law mandates that all fee transfers be properly documented with clear audit trails and compliance with financial transaction regulations. Professional Partnership Regulations may apply if the agreement involves licensed professionals, requiring adherence to specific industry standards and ethical guidelines governing fee-sharing practices.