Partnership Agreement Between Two Companies for Saudi Arabia

Partnership Agreement Between Two Companies Template for Saudi Arabia

A comprehensive legal agreement governed by Saudi Arabian law that establishes and regulates a partnership between two corporate entities. This document outlines the terms and conditions of the partnership, including capital contributions, profit sharing, management structure, and operational procedures, while ensuring compliance with Saudi Companies Law and Sharia principles. It addresses key aspects such as decision-making processes, partner responsibilities, dispute resolution mechanisms, and termination procedures, all within the framework of Saudi Arabian commercial regulations and business practices.

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What is a Partnership Agreement Between Two Companies?

The Partnership Agreement Between Two Companies is a fundamental legal document used when two corporate entities wish to establish a formal business partnership in Saudi Arabia. This agreement is essential for companies looking to combine resources, expertise, or market presence while maintaining their separate legal identities. It must comply with the Saudi Companies Law of 2015 (as amended), Ministry of Commerce regulations, and Sharia principles. The document typically includes detailed provisions on capital contributions, profit-sharing arrangements, management structures, operational procedures, and exit mechanisms. It's particularly important in the Saudi context due to specific local requirements regarding foreign investment restrictions, Zakat considerations, and commercial registration procedures. The agreement serves as the primary reference point for the partnership's governance and helps prevent future disputes by clearly defining all aspects of the business relationship.

What sections should be included in a Partnership Agreement Between Two Companies?

1. Parties: Identification of both companies entering into the partnership, including full legal names, commercial registration numbers, and registered addresses

2. Background: Context of the partnership and brief description of each company's business

3. Definitions: Definitions of key terms used throughout the agreement

4. Partnership Structure: Legal form of partnership, ownership percentages, and capital contributions

5. Purpose and Scope: Detailed description of partnership's business objectives and permitted activities

6. Management and Control: Governance structure, decision-making processes, and appointment of managers

7. Capital and Financing: Initial and ongoing capital contributions, funding mechanisms, and profit/loss sharing

8. Distribution of Profits and Losses: Methods and timing of profit distribution and loss allocation

9. Rights and Obligations: Core responsibilities and rights of each partner

10. Business Operations: Day-to-day management, operational procedures, and business policies

11. Representations and Warranties: Standard declarations about each party's capacity and authority

12. Term and Termination: Duration of partnership and grounds for termination

13. Dispute Resolution: Procedures for resolving disputes, including jurisdiction and applicable law

14. Confidentiality: Protection of confidential information and trade secrets

15. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

What sections are optional to include in a Partnership Agreement Between Two Companies?

1. Intellectual Property Rights: Ownership and usage rights of IP when the partnership involves technology or branded products

2. Non-Competition: Restrictions on competing activities, used when partners operate in similar markets

3. Employee Matters: Employment and staffing arrangements when the partnership involves shared employees

4. Insurance: Insurance requirements when specific coverage is needed for partnership activities

5. Environmental Compliance: Environmental obligations for partnerships in industries with environmental impact

6. Foreign Investment Provisions: Special provisions when one partner is a foreign entity

7. Zakat and Tax Provisions: Detailed tax arrangements when complex tax structures are involved

8. Change of Control: Procedures for handling ownership changes in partner companies

9. Force Majeure: Provisions for unforeseen circumstances affecting partnership operations

What schedules should be included in a Partnership Agreement Between Two Companies?

1. Schedule 1: Capital Contributions: Detailed breakdown of initial and committed capital contributions

2. Schedule 2: Business Plan: Initial business plan and strategic objectives

3. Schedule 3: Management Structure: Detailed organizational structure and management procedures

4. Schedule 4: Key Performance Indicators: Agreed performance metrics and targets

5. Schedule 5: Assets Register: List of assets contributed by each partner

6. Schedule 6: Intellectual Property: Details of IP rights and licensing arrangements

7. Schedule 7: Reserved Matters: List of decisions requiring special approval

8. Appendix A: Power of Attorney: Required authorizations and delegations

9. Appendix B: Compliance Requirements: Regulatory and Sharia compliance requirements

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

Cost

Free to use

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