Standby Equity Distribution Agreement Template for Saudi Arabia

The Standby Equity Distribution Agreement (SEDA) is a strategic financing instrument used in the Saudi Arabian market when a listed company requires flexible access to equity capital over an extended period. This document becomes relevant when companies seek to establish a committed source of equity funding without immediate dilution, allowing them to draw down capital as needed based on market conditions and business requirements. The agreement must incorporate specific provisions to ensure compliance with Saudi Arabia's Capital Market Law, Companies Law, and Shariah principles, while also addressing Tadawul listing requirements. It typically includes detailed mechanisms for determining share pricing, issuance procedures, regulatory approvals, and trading restrictions, making it particularly suitable for companies with growing capital needs or strategic expansion plans.

1. Parties: Identification of the parties, including the Company and the Investor

2. Background: Context of the agreement, including company's authorization for share issuance and regulatory approvals

3. Definitions and Interpretation: Key terms used in the agreement, including financial, regulatory, and technical definitions

4. Shariah Compliance Declaration: Statement confirming the agreement's compliance with Islamic finance principles

5. Equity Distribution Commitment: Core terms of the standby commitment, including maximum commitment amount and duration

6. Pricing Mechanism: Formula and procedures for determining the price of shares in each drawdown

7. Drawdown Procedures: Detailed process for requesting and executing each equity distribution

8. Conditions Precedent: Requirements to be satisfied before the agreement becomes effective

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

10. Covenants: Ongoing obligations of the parties during the agreement term

11. Regulatory Compliance: Obligations regarding CMA, Tadawul, and other regulatory requirements

12. Events of Default: Circumstances constituting default and consequences

13. Termination: Grounds and procedures for ending the agreement

14. Governing Law and Jurisdiction: Confirmation of Saudi law governance and dispute resolution procedures

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