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Preliminary Partnership Agreement Template for United Arab Emirates

This document serves as a preliminary framework for establishing a business partnership in the United Arab Emirates, governed by UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and related regulations. It outlines the initial terms and conditions for the proposed partnership, including capital contributions, business objectives, and timeline for finalizing the definitive agreement. The document incorporates UAE-specific legal requirements while providing necessary protections and obligations for all parties during the negotiation phase. It serves as a stepping stone to the final partnership agreement while ensuring compliance with local laws and regulations.

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What is a Preliminary Partnership Agreement?

The Preliminary Partnership Agreement is a crucial document used in the early stages of business partnership formation in the United Arab Emirates. It serves as a foundational document that outlines the intended terms of collaboration between parties while they work towards a definitive partnership agreement. This document is particularly important in the UAE context, where business relationships often require careful structuring to comply with local ownership requirements and commercial regulations. The agreement typically includes provisions for due diligence, exclusivity, and good faith negotiations, while addressing key aspects such as proposed capital structure, management arrangements, and timeline for finalizing the partnership. It provides a framework for negotiations while offering protection to all parties during the preliminary phase of their business relationship.

What sections should be included in a Preliminary Partnership Agreement?

1. Parties: Identification and details of all prospective partners, including full legal names, addresses, and registration details if applicable

2. Background: Context of the proposed partnership, including the general business purpose and intentions of the parties

3. Definitions: Key terms used throughout the agreement, ensuring clarity and consistent interpretation

4. Partnership Scope: Detailed description of the proposed business venture, objectives, and intended activities

5. Duration and Timeline: Proposed timeline for partnership formation, including key milestones and deadlines for finalizing the definitive agreement

6. Proposed Capital Structure: Outline of intended capital contributions, profit/loss sharing ratios, and financial commitments

7. Due Diligence: Framework for the exchange and review of business information, including confidentiality obligations

8. Exclusivity: Terms preventing parties from negotiating similar arrangements with other parties during the preliminary period

9. Confidentiality: Provisions protecting sensitive information exchanged during negotiations

10. Good Faith Negotiations: Commitment to negotiate the definitive agreement in good faith

11. Costs and Expenses: Allocation of costs incurred during the preliminary phase

12. Governing Law and Jurisdiction: Specification of UAE law as governing law and relevant courts for dispute resolution

13. Termination: Circumstances under which the preliminary agreement can be terminated

14. Notices: Process and contact details for formal communications between parties

What sections are optional to include in a Preliminary Partnership Agreement?

1. Management Structure: Preliminary outline of proposed management roles and decision-making processes, used when partners want to define early governance structure

2. Regulatory Compliance: Specific requirements for regulated industries or activities, included when the partnership involves regulated business activities

3. Islamic Finance Compliance: Specific provisions ensuring Sharia compliance, included when partners require Islamic finance principles to be followed

4. Intellectual Property: Preliminary arrangements for IP ownership and usage, included when the partnership involves significant IP assets

5. Non-Competition: Restrictions on competitive activities, included when partners have competing business interests

6. Break Fee: Compensation payable if one party withdraws from negotiations, included in high-value or complex transactions

7. Future Funding Commitments: Framework for additional capital contributions, included when future funding requirements are anticipated

What schedules should be included in a Preliminary Partnership Agreement?

1. Business Plan Overview: High-level summary of the proposed business plan and strategic objectives

2. Initial Capital Contributions: Detailed breakdown of proposed capital contributions from each partner

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

4. Timeline and Milestones: Detailed schedule of key dates and deliverables for partnership formation

5. Required Licenses and Permits: List of regulatory approvals needed for the partnership

6. Proposed Management Structure: Organizational chart and description of key management positions

7. Form of Definitive Agreement: Outline or key terms of the final partnership agreement to be negotiated

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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