The Advisory Shares Agreement is a crucial document for companies in Saudi Arabia seeking to attract and retain high-caliber advisors by offering equity-based compensation. This agreement type is particularly relevant in the context of Saudi Arabia's Vision 2030, which emphasizes private sector growth and innovation. The document outlines the specific terms under which advisors receive shares or share rights, including vesting conditions, service expectations, and compliance requirements with both Saudi corporate law and Sharia principles. It's commonly used by startups, growth companies, and established businesses looking to leverage external expertise while conserving cash resources. The agreement must carefully balance Saudi Arabian legal requirements, including those set by the Ministry of Commerce and the Capital Market Authority, with practical business needs. The document typically includes detailed provisions about share rights, vesting schedules, advisory services scope, and termination conditions, making it essential for companies seeking to establish long-term advisory relationships through equity incentives.
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1. Parties: Identification of the Company and the Advisor, including full legal names, addresses, and registration details as required by Saudi law
2. Background: Context of the agreement, including the Company's business and the Advisor's expertise
3. Definitions: Key terms used throughout the agreement, including specific Saudi legal terminology
4. Appointment and Services: Scope of advisory services to be provided and terms of appointment
5. Share Rights: Details of the advisory shares, including number, class, and associated rights
6. Vesting Schedule: Timeline and conditions for share vesting, including any performance metrics
7. Advisor's Obligations: Specific duties, time commitments, and performance expectations
8. Company's Obligations: Company's commitments, including information provision and support
9. Representations and Warranties: Standard declarations by both parties, including compliance with Saudi law
10. Confidentiality: Protection of sensitive information and trade secrets
11. Term and Termination: Duration of the agreement and circumstances for early termination
12. Effects of Termination: Consequences of agreement termination on unvested shares
13. Compliance with Laws: Specific provisions ensuring compliance with Saudi laws and Sharia principles
14. Governing Law and Jurisdiction: Confirmation of Saudi law governance and dispute resolution mechanisms
1. Non-Competition: Restrictions on advisor's involvement with competitors, used when advisor has access to sensitive information
2. Tax Provisions: Specific tax handling clauses, included when advisor is subject to Saudi tax regulations
3. Foreign Investment Provisions: Additional clauses required when advisor is non-Saudi
4. Board Observer Rights: Rights to attend board meetings, included for senior advisors
5. Drag-Along Rights: Obligation to sell shares in case of company sale, included for significant share allocations
6. Tag-Along Rights: Right to join in sale of shares, included for significant share allocations
7. Intellectual Property Rights: IP ownership and transfer provisions, included when advisor may create IP
8. Shariah Compliance Declaration: Detailed Shariah compliance provisions, included when specifically required by parties
1. Schedule 1: Services Description: Detailed outline of advisory services to be provided
2. Schedule 2: Share Vesting Schedule: Detailed timetable and conditions for share vesting
3. Schedule 3: Company Information: Key company details including capital structure and existing shareholders
4. Schedule 4: Advisor Qualifications: Advisor's relevant experience and qualifications
5. Schedule 5: Share Rights and Restrictions: Detailed terms of share rights, including voting and dividend rights
6. Appendix A: Required Regulatory Approvals: List of necessary regulatory approvals and compliance requirements
7. Appendix B: Share Certificate Template: Format for share certificates compliant with Saudi regulations
8. Appendix C: Shareholder Resolution: Template for shareholder approval of share issuance
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