The Shareholder Purchase Agreement is a crucial document used in Saudi Arabia when transferring ownership of shares in a company from one party to another. It serves as the primary transaction document in share acquisitions, whether for partial or complete ownership transfers. This agreement must comply with Saudi Companies Law, Capital Market Authority regulations (for listed companies), and Sharia principles. It typically includes detailed provisions on purchase price determination, payment terms, warranties and representations, conditions precedent (including regulatory approvals), and completion mechanics. The document is particularly important in the Saudi context due to specific local requirements such as Ministry of Commerce registration, foreign investment restrictions where applicable, and Sharia-compliant transaction structuring. It provides essential protection for both buyers and sellers while ensuring the transaction's enforceability under Saudi law.
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1. Parties: Identification of the Seller(s), Purchaser(s), and the Company, including full legal names and registration details as required under Saudi law
2. Background: Context of the transaction, current shareholding structure, and purpose of the agreement
3. Definitions and Interpretation: Key terms used throughout the agreement, including Arabic terms where relevant
4. Sale and Purchase: Core transaction terms including shares being sold, purchase price, and payment mechanics
5. Conditions Precedent: Required approvals, including Ministry of Investment approval if foreign investors involved, and other pre-completion requirements
6. Completion: Mechanics of closing, including required documentation and processes under Saudi law
7. Seller's Warranties: Standard and Saudi-specific warranties regarding the shares, company, and business
8. Purchaser's Warranties: Warranties from the purchaser, including capacity and authority to execute
9. Limitations on Liability: Scope and limitations of seller's liability for warranty breaches
10. Pre-Completion Obligations: Conduct of business requirements between signing and completion
11. Confidentiality: Confidentiality obligations and permitted disclosures
12. Announcements: Requirements for public statements about the transaction
13. Further Assurance: Obligations to execute further documents and take additional steps if needed
14. Assignment: Restrictions on transfer of rights under the agreement
15. Notices: Format and delivery requirements for formal communications
16. Governing Law and Dispute Resolution: Saudi law as governing law and dispute resolution mechanisms
1. Tag Along Rights: Include when minority shareholders need protection in case of future sales
2. Drag Along Rights: Include when majority shareholders want the right to force minorities to join in future sales
3. Non-Competition: Include when sellers need to be restricted from competing post-sale
4. Transitional Services: Include when seller will provide ongoing services to the company post-completion
5. Employee Matters: Include when specific arrangements for key employees are needed
6. Regulatory Compliance: Include for regulated industries or when specific regulatory requirements apply
7. Tax Covenant: Include when specific tax indemnities or arrangements are required
8. Break Fee: Include when parties want to specify damages for failure to complete
9. Escrow Arrangements: Include when part of purchase price will be held in escrow
10. Shareholder Loans: Include when dealing with existing shareholder loans
1. Details of the Company: Corporate information, share capital, and shareholding structure
2. Conditions Precedent: Detailed list of all required pre-completion conditions
3. Completion Requirements: Detailed list of completion deliverables and actions
4. Warranties: Detailed warranties about the company, business, and shares
5. Properties: Details of company's real estate assets
6. Intellectual Property: List of company's IP rights
7. Material Contracts: Summary of key commercial contracts
8. Employee Information: Details of key employees and benefits
9. Permitted Leakage: Agreed exceptions to no leakage covenant
10. Tax Affairs: Details of company's tax position and ongoing matters
11. Form of Resignation Letters: Template resignation letters for outgoing directors
12. Form of Board Resolutions: Template board resolutions for completion
13. Disclosure Letter: Exceptions to warranties
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