Investment Subscription Agreement for Saudi Arabia

Investment Subscription Agreement Template for Saudi Arabia

A comprehensive legal agreement governed by Saudi Arabian law that formalizes the terms and conditions under which an investor subscribes for shares, units, or other securities in a company or investment vehicle. The document ensures compliance with Saudi Arabian capital market regulations, companies law, and where applicable, foreign investment requirements. It details the investment amount, payment terms, representations and warranties, and establishes the rights and obligations of both the investor and the issuing entity while incorporating necessary Shariah compliance considerations where relevant.

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What is a Investment Subscription Agreement?

The Investment Subscription Agreement serves as a critical document in Saudi Arabian business transactions, used when an investor seeks to acquire shares, units, or other securities in a company or investment vehicle. It is essential for both private and public offerings, ensuring compliance with Saudi law including the Capital Market Law, Companies Law, and where applicable, Foreign Investment Law. The agreement typically includes detailed provisions on investment terms, investor rights, compliance requirements (including anti-money laundering and KYC), and Shariah compliance where necessary. This document is particularly important given Saudi Arabia's evolving investment landscape under Vision 2030 and increasing foreign investment interest. The Investment Subscription Agreement must be carefully structured to account for local regulatory requirements while protecting both issuer and investor interests.

What sections should be included in a Investment Subscription Agreement?

1. Parties: Identification of the issuer/company and the subscriber/investor with full legal names and details

2. Background: Context of the investment opportunity and brief description of the company and investment structure

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Subscription and Payment: Details of the investment amount, number of shares/units, payment terms and mechanics

5. Conditions Precedent: Conditions that must be satisfied before the subscription becomes effective

6. Closing: Mechanics and requirements for completing the investment transaction

7. Representations and Warranties: Statements of fact and assurances from both parties

8. Investor Undertakings: Specific commitments and obligations of the investor

9. Company Undertakings: Specific commitments and obligations of the company

10. Anti-Money Laundering Provisions: Compliance with Saudi AML regulations and required declarations

11. Confidentiality: Obligations regarding confidential information

12. Notices: Process and requirements for formal communications between parties

13. Governing Law and Jurisdiction: Saudi law as governing law and jurisdiction of Saudi courts

14. General Provisions: Standard boilerplate clauses including amendments, waiver, severability

15. Execution: Signature blocks and execution formalities

What sections are optional to include in a Investment Subscription Agreement?

1. Tag-Along Rights: Include when offering minority investor protections for share transfers

2. Drag-Along Rights: Include when majority shareholders want right to force minority participation in sale

3. Pre-emptive Rights: Include when existing shareholders should have rights to maintain ownership percentage

4. Board Representation: Include when investor is receiving board appointment rights

5. Dividend Policy: Include when specific dividend arrangements are part of the investment terms

6. Exit Rights: Include when specific exit mechanisms or IPO rights are granted to investors

7. Shariah Compliance: Include when investment must comply with Islamic finance principles

8. Foreign Investment Provisions: Include when investor is non-Saudi and SAGIA requirements apply

What schedules should be included in a Investment Subscription Agreement?

1. Subscription Details: Detailed breakdown of investment amount, share/unit numbers, and price calculations

2. Company Information: Corporate details, registration information, and capital structure

3. Conditions Precedent Documents: List of required documents and confirmations for closing

4. Form of Share Certificate: Template for share certificate to be issued

5. Warranties: Detailed warranties from the company about its business and affairs

6. KYC Requirements: List of required know-your-customer documentation

7. Shareholder Rights: Detailed description of rights attached to shares/investment

8. Corporate Authorizations: Copies of relevant board and shareholder resolutions

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

Jurisdiction

Saudi Arabia

Publisher

Genie AI

Cost

Free to use

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