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Letter Of Intent Share Purchase Agreement Template for United Arab Emirates

A Letter of Intent for Share Purchase Agreement under UAE law serves as a preliminary document outlining the proposed terms and conditions for the acquisition of shares in a company. This document, while primarily non-binding except for specific provisions such as confidentiality and exclusivity, establishes the framework for negotiation and due diligence processes under UAE jurisdiction. It addresses key aspects including the proposed purchase price, transaction timeline, and basic terms while complying with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and other relevant UAE regulations governing corporate transactions.

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What is a Letter Of Intent Share Purchase Agreement?

The Letter Of Intent Share Purchase Agreement is a crucial preliminary document used in UAE corporate transactions when parties wish to formalize their initial understanding regarding a potential share acquisition. This document serves as a roadmap for the transaction, typically used after initial discussions but before detailed due diligence and final negotiations begin. While governed by UAE law, particularly the Commercial Companies Law and Civil Code, it primarily serves as a non-binding document except for specific provisions such as confidentiality and exclusivity. The document is especially relevant in the UAE's dynamic business environment, where cross-border transactions and complex corporate structures are common. It helps parties establish clear parameters for the proposed transaction, including timelines, basic terms, and due diligence requirements, while providing flexibility for detailed negotiations in the final Share Purchase Agreement.

What sections should be included in a Letter Of Intent Share Purchase Agreement?

1. Parties: Identification of the potential seller(s) and buyer(s), including full legal names and registration details

2. Background: Brief description of the company whose shares are being purchased and the context of the proposed transaction

3. Definitions: Key terms used throughout the document

4. Subject Matter: Clear identification of the shares proposed to be purchased, including number and class of shares

5. Proposed Purchase Price: Indicative purchase price or pricing mechanism, subject to due diligence and final agreement

6. Due Diligence: Outline of the proposed due diligence process, timeline, and scope

7. Timeline: Proposed schedule for key milestones including due diligence, negotiation, and target completion date

8. Exclusivity: Period during which the seller agrees not to negotiate with other potential buyers

9. Confidentiality: Obligations regarding the confidential treatment of information exchanged

10. Legal Effect: Statement clarifying which provisions are binding (typically confidentiality and exclusivity) and which are non-binding

What sections are optional to include in a Letter Of Intent Share Purchase Agreement?

1. Break Fee: Applicable if parties agree to a fee payable if either party withdraws from negotiations under specific circumstances

2. Governing Law and Jurisdiction: While typically included in the final SPA, can be included in the LOI if parties want clarity on which law governs the binding provisions

3. Transaction Structure: Include if there are specific requirements for how the transaction will be structured (e.g., phased completion, earn-outs)

4. Key Conditions: Major conditions that would need to be satisfied before proceeding with the transaction

5. Costs: Agreement on who bears the costs of preparing the LOI and conducting due diligence

6. Management and Operations: Include if there are specific agreements about how the business will be operated during the negotiation period

What schedules should be included in a Letter Of Intent Share Purchase Agreement?

1. Corporate Structure Chart: Diagram showing the current ownership structure of the target company

2. Indicative Timeline: Detailed breakdown of proposed transaction milestones and dates

3. Due Diligence Requirements: List of key documents and information required for due diligence

4. Key Terms Sheet: Summary of main commercial terms proposed for the final SPA

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Cost

Free to use

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