Share Purchase Agreement Between Two Individuals Template for Saudi Arabia

When you need to transfer company shares between individuals in Saudi Arabia, a Share Purchase Agreement is essential to ensure the transaction complies with local laws and protects both parties. This legal document establishes the terms and conditions for transferring ownership of shares from one individual to another, while meeting the strict requirements of Saudi Companies Law and related regulations.

When do you need this document?

You'll need a Share Purchase Agreement when selling or buying shares in a Saudi company as an individual. This includes situations where you're exiting a family business, bringing in a new partner, or transferring shares as part of succession planning. The document is particularly important for private limited companies where shares aren't publicly traded. You'll also need this agreement when restructuring ownership following disputes, divorce settlements involving business assets, or when investors want to exit their positions in private companies. Given Saudi Arabia's emphasis on proper documentation, this agreement is mandatory for any legitimate share transfer.

Key legal considerations

Your Share Purchase Agreement must include comprehensive warranties from the seller about the shares' legal status, company financial position, and absence of encumbrances. Under Saudi law, you must ensure the seller has clear title to the shares and authority to transfer them. The agreement should specify payment terms, completion conditions, and any pre-completion requirements such as due diligence access. You'll need to address regulatory approvals, particularly if the company operates in regulated sectors like banking, telecommunications, or healthcare. The document must also cover indemnity provisions protecting both parties from undisclosed liabilities and include dispute resolution mechanisms compliant with Saudi commercial law.

Legal requirements in Saudi Arabia

Saudi Companies Law 2015 mandates that share transfers be properly documented and registered with the Ministry of Commerce. Your agreement must comply with Capital Market Authority regulations if the company has any public market exposure, even indirectly. Anti-Money Laundering Law requirements mean you must document the source of funds and verify buyer identity through proper due diligence. The agreement requires notarization by a licensed notary public and may need Ministry of Commerce approval depending on the company's articles of association. For companies with foreign ownership, you must ensure compliance with Foreign Investment Law restrictions. Additionally, Zakat, Tax and Customs Authority regulations require proper documentation of the transaction's tax implications, including any applicable capital gains or transfer taxes. All provisions must align with Shariah principles governing commercial contracts in Saudi Arabia.