The Restricted Share Purchase Agreement is a specialized legal instrument used in Saudi Arabia when transferring shares that carry specific restrictions or conditions on their ownership and transfer. This document is particularly crucial in scenarios involving employee share schemes, corporate restructuring, or strategic investments where the company needs to maintain control over share ownership and transfer. The agreement must comply with Saudi Arabian Companies Law, Capital Market Authority regulations, and Islamic finance principles, making it distinct from similar agreements in other jurisdictions. It typically includes comprehensive provisions for share vesting, transfer restrictions, regulatory compliance, and shareholder rights, while ensuring all terms align with Sharia principles. The document is commonly used for employee retention programs, family business succession planning, and controlled corporate expansion strategies.
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1. Parties: Identification of the seller, purchaser, and company whose shares are being sold
2. Background: Context of the transaction, including company information and purpose of the restricted share arrangement
3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation
4. Sale and Purchase: Core transaction terms including number of shares, price, and payment terms
5. Restrictions on Shares: Details of transfer restrictions, vesting conditions, and lock-up periods
6. Compliance with Sharia Principles: Confirmation of compliance with Islamic finance requirements
7. Conditions Precedent: Prerequisites that must be satisfied before completion
8. Completion: Mechanics and timing of the transfer, including required documentation
9. Representations and Warranties: Standard and specific warranties from both parties
10. Covenants and Undertakings: Ongoing obligations of the parties
11. Default and Remedies: Consequences of breach and available remedies
12. Regulatory Compliance: Compliance with CMA regulations and other applicable laws
13. Confidentiality: Protection of sensitive information
14. Notices: Communication procedures between parties
15. Governing Law and Jurisdiction: Confirmation of Saudi law application and dispute resolution mechanisms
1. Tag-Along Rights: Rights of minority shareholders to join in sale of shares - include when protecting minority interests
2. Drag-Along Rights: Rights of majority shareholders to force minority participation in sale - include for majority protection
3. Employee-Specific Provisions: Additional terms for employee share schemes - include when shares are part of employment compensation
4. Foreign Investment Provisions: Additional requirements for foreign investors - include when purchaser is non-Saudi
5. Put and Call Options: Rights to force sale or purchase of shares - include when parties want future flexibility
6. Non-Competition and Non-Solicitation: Restrictions on competitive activities - include for strategic investors
7. Tax Provisions: Specific tax handling and obligations - include for complex tax situations
8. Zakat Provisions: Handling of Zakat obligations - include when relevant to structure
1. Share Details: Detailed description of shares including class, rights, and current ownership
2. Completion Requirements: Checklist of documents and actions required for completion
3. Vesting Schedule: Detailed timeline and conditions for share vesting
4. Form of Share Transfer Deed: Template for the formal transfer document
5. Regulatory Approvals: List of required governmental and regulatory approvals
6. Corporate Authorizations: Copies of board and shareholder resolutions
7. Warranties: Detailed warranties given by each party
8. Restriction Notices: Form of notices recording transfer restrictions
9. Company Constitutional Documents: Articles of association and other relevant corporate documents
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