Option Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Option Agreement

"I need an Option Agreement for a call option on a commercial property in Riyadh, with the option period running until March 2025, ensuring Shariah compliance and including specific conditions for regulatory approvals from relevant Saudi authorities."

Document background

The Option Agreement serves as a crucial legal instrument in Saudi Arabian commercial transactions, providing parties with the right, but not the obligation, to engage in a future transaction under predetermined terms. This document is particularly vital when structuring deals that require flexibility while maintaining Shariah compliance. It's commonly used in various contexts including real estate transactions, corporate acquisitions, and investment arrangements. The agreement must carefully balance commercial objectives with Islamic financial principles, incorporating necessary provisions to satisfy both the Capital Market Authority (CMA) requirements and Shariah guidelines. This Option Agreement template includes comprehensive terms covering option exercise mechanics, pricing structures, regulatory compliance, and risk allocation, while ensuring alignment with Saudi Arabian legal requirements and market practices.

Suggested Sections

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

2. Background: Context of the agreement, relationship between parties, and purpose of the option

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

4. Grant of Option: Core terms of the option, including type (put/call), subject matter, and exercise conditions

5. Option Period: Duration of the option, including commencement and expiration dates

6. Exercise Price and Payment: Specification of the option price and payment terms in compliance with Shariah principles

7. Exercise Procedure: Process and requirements for exercising the option

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

9. Regulatory Compliance: Compliance with Saudi laws, CMA regulations, and Shariah principles

10. Termination: Circumstances and process for early termination

11. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and jurisdiction for disputes

12. Notices: Process for formal communications between parties

13. General Provisions: Standard boilerplate clauses adapted to Saudi law requirements

Optional Sections

1. Security Arrangements: Required when the option involves additional security or collateral arrangements

2. Third Party Rights: Needed when the option affects rights of parties not directly involved in the agreement

3. Shariah Compliance Declaration: Detailed section on Shariah compliance, recommended for complex transactions

4. Regulatory Approvals: Required when the option exercise needs specific regulatory approvals

5. Tax Provisions: Include when tax implications need specific addressing

6. Force Majeure: Detailed force majeure provisions for high-value or long-term options

7. Assignment and Transfer: Required when transfer of option rights needs to be addressed specifically

Suggested Schedules

1. Option Asset Details: Detailed description of the asset(s) subject to the option

2. Exercise Notice Form: Template form for exercising the option

3. Pricing Mechanism: Detailed calculation method for the option price if complex

4. Required Approvals: List of regulatory and other approvals required

5. Shariah Compliance Certificate: If obtained, certificate from Shariah scholars approving the structure

6. Corporate Authorizations: Copies of relevant corporate approvals and authorizations

7. Conditions Precedent: List of conditions that must be satisfied before option exercise

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Financial Services

Real Estate

Manufacturing

Energy

Mining

Technology

Healthcare

Infrastructure

Telecommunications

Commercial Trading

Relevant Teams

Legal

Finance

Compliance

Risk Management

Corporate Development

Investment

Treasury

Corporate Secretariat

Shariah Advisory

Business Development

Relevant Roles

Legal Counsel

Corporate Lawyer

Compliance Officer

Chief Financial Officer

Investment Manager

Commercial Director

Risk Manager

Business Development Manager

Corporate Secretary

Finance Director

Shariah Compliance Officer

Transaction Manager

Investment Banker

Asset Manager

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