Membership Interest Transfer Agreement Template for Saudi Arabia

The Membership Interest Transfer Agreement is a crucial document used in Saudi Arabian business transactions when transferring ownership interests in limited liability companies and similar entities. It must comply with Saudi Companies Law (Royal Decree No. M/3) and related regulations, including requirements for notarization and registration with the Ministry of Commerce. The agreement is essential for documenting the terms of transfer, purchase price, payment mechanisms, and necessary warranties while ensuring compliance with local regulations, including foreign ownership restrictions where applicable. It typically includes provisions for regulatory approvals, Zakat/tax clearances, and other jurisdiction-specific requirements. The document serves as both a transfer instrument and a comprehensive record of the parties' obligations and rights under Saudi law, making it fundamental for business ownership transitions in the Kingdom.

1. Parties: Identification of transferor, transferee, and the company whose interests are being transferred

2. Background: Context of the transfer, description of the company and current ownership structure

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

4. Sale and Transfer: Core transfer provisions, including description of interests being transferred and consideration

5. Purchase Price and Payment: Detailed payment terms, method of payment, and any adjustments

6. Conditions Precedent: Required approvals, consents, and actions that must occur before closing

7. Closing: Mechanics of closing, including timing, location, and deliverables

8. Seller's Warranties: Warranties regarding ownership, authority, and company status

9. Buyer's Warranties: Warranties regarding authority and ability to complete transaction

10. Pre-Closing Covenants: Obligations of parties between signing and closing

11. Tax and Zakat: Allocation of tax and Zakat liabilities and filing responsibilities

12. Confidentiality: Obligations regarding transaction and company information

13. Governing Law and Dispute Resolution: Saudi law as governing law and dispute resolution mechanisms

14. General Provisions: Standard boilerplate including notices, amendments, and entire agreement