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Preference Share Agreement

Preference Share Agreement Template for United Arab Emirates

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Key Requirements PROMPT example:

Preference Share Agreement

"I need a Preference Share Agreement for my UAE-based technology startup to issue Series A preference shares to a venture capital investor, with 1x liquidation preference and standard anti-dilution protection, planned for completion by March 2025."

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Document background
The Preference Share Agreement is a crucial document used when a UAE company wishes to issue shares with preferential rights, typically for raising capital while maintaining existing control structures. This agreement, governed by UAE law, particularly Federal Law No. 32 of 2021, outlines the specific rights and privileges attached to preference shares, including priority dividend payments, voting rights, and capital return preferences. It is commonly used in private equity investments, corporate restructuring, and strategic financing rounds, providing investors with preferred status while protecting both the company's and shareholders' interests. The document must address specific UAE requirements regarding corporate governance, foreign ownership restrictions, and local regulatory compliance, making it essential for both local and international investment transactions in the UAE market.
Suggested Sections

1. Parties: Identification of the Company issuing the preference shares and the Preference Shareholders

2. Background: Context of the agreement, including company information and purpose of issuing preference shares

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

4. Subscription and Issue: Details of preference share subscription, including number of shares, price, and payment terms

5. Preference Share Rights: Core rights attached to preference shares including dividend rights, voting rights, and capital return preference

6. Dividend Provisions: Detailed terms regarding dividend calculations, declaration, and payment

7. Conversion Rights: Terms and conditions for converting preference shares to ordinary shares, if applicable

8. Transfer Restrictions: Limitations and conditions on transfer of preference shares

9. Exit Rights: Provisions for exit scenarios including redemption and put/call options

10. Company Covenants: Company's obligations to preference shareholders

11. Representations and Warranties: Standard representations and warranties from both parties

12. Events of Default: Circumstances constituting default and consequences

13. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction details

Optional Sections

1. Anti-dilution Protection: Protection against dilution of shareholding, used when there's likelihood of future share issuances

2. Tag-Along Rights: Rights of preference shareholders to join in sale of shares by majority shareholders

3. Drag-Along Rights: Rights to force minority shareholders to join in sale of shares

4. Board Representation: Rights of preference shareholders to appoint board members, if applicable

5. Information Rights: Special information access rights for preference shareholders

6. Liquidation Preference: Special rights in case of liquidation, if different from standard preference rights

7. Shariah Compliance: Additional provisions for Shariah-compliant preference shares

8. Foreign Ownership Provisions: Special provisions if foreign ownership is involved

Suggested Schedules

1. Schedule 1 - Share Certificate: Form of preference share certificate

2. Schedule 2 - Subscription Details: Detailed information about share subscription including shareholder information and payment details

3. Schedule 3 - Company Information: Detailed corporate information including capital structure and existing shareholders

4. Schedule 4 - Dividend Calculation: Formula and examples of dividend calculations

5. Schedule 5 - Conversion Mechanics: Detailed procedures for share conversion if applicable

6. Schedule 6 - Form of Transfer Notice: Template for share transfer notifications

7. Schedule 7 - Deed of Adherence: Template for new shareholders to become bound by the agreement

8. Appendix A - Board Resolutions: Copy of board resolutions approving preference share issuance

9. Appendix B - Regulatory Approvals: Copies of required UAE regulatory approvals

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions

























































Clauses



































Relevant Industries

Financial Services

Private Equity

Investment Banking

Real Estate Development

Technology and Startups

Manufacturing

Healthcare

Energy

Infrastructure

Telecommunications

Family Businesses

Venture Capital

Relevant Teams

Legal

Finance

Corporate Governance

Compliance

Investment

Corporate Development

Risk Management

Board Secretariat

Treasury

Investor Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Corporate Counsel

Investment Director

Private Equity Manager

Company Secretary

Financial Controller

Corporate Finance Manager

Compliance Officer

Board Director

Investment Banker

Legal Counsel

Managing Director

Venture Capital Partner

Risk Manager

Corporate Development Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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