The Shares Subscription Agreement is a crucial document used when a company in Saudi Arabia issues new shares to investors, whether through private placement or public offering. It serves as the primary legal instrument documenting the share subscription process, ensuring compliance with the Saudi Companies Law, Capital Market Authority regulations, and other applicable Saudi Arabian legislation. This agreement is essential for both private and public companies, particularly during capital raises, employee share schemes, or strategic investments. The document typically includes detailed provisions about the subscription process, regulatory compliance requirements, warranties, and completion mechanics. A well-drafted Shares Subscription Agreement is vital for protecting both the issuing company's and subscribers' interests while ensuring adherence to Saudi Arabian corporate and securities regulations.
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1. Parties: Identification of the Company issuing shares and the Subscriber(s)
2. Background: Recitals explaining the context of the share subscription and the company's authority to issue shares
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Subscription and Payment: Details of shares being subscribed for, subscription price, and payment terms
5. Conditions Precedent: Conditions that must be satisfied before the subscription becomes effective
6. Completion: Mechanics and timing of the subscription completion, including actions required by each party
7. Company's Warranties: Warranties given by the company regarding its status, authority, and the shares being issued
8. Subscriber's Warranties: Warranties from the subscriber regarding capacity, authority, and funding source
9. Regulatory Compliance: Provisions ensuring compliance with Saudi laws and CMA regulations
10. Confidentiality: Obligations regarding confidential information
11. Notices: Process for giving formal notices under the agreement
12. General Provisions: Standard boilerplate provisions including governing law, assignment, and amendments
13. Governing Law and Jurisdiction: Specification of Saudi law as governing law and jurisdiction for disputes
1. Multiple Closings: Required if the subscription will be completed in multiple tranches
2. Foreign Investment Provisions: Required if the subscriber is a foreign investor, addressing SAMA and CMA requirements
3. Tag-Along Rights: Optional protection for minority shareholders in certain subscription scenarios
4. Anti-dilution Protection: Optional protection against future share issuances
5. Shareholder Approval: Required if specific shareholder approval is needed under the company's articles
6. Share Transfer Restrictions: Optional restrictions on future transfer of subscribed shares
7. Regulatory Pre-approval: Required if CMA or other regulatory pre-approval is needed
8. Zakat and Tax Provisions: Required for clarity on tax obligations, especially with foreign investors
1. Subscription Details: Details of shares, price, and payment terms
2. Form of Share Certificate: Template for the share certificate to be issued
3. Conditions Precedent Documents: List of required documents and confirmations
4. Company Information: Key corporate information and existing shareholding structure
5. Completion Requirements: Detailed checklist of completion requirements and documents
6. Regulatory Compliance Checklist: Checklist of Saudi regulatory requirements and confirmations
7. KYC Requirements: Required know-your-customer documentation for compliance
8. Form of Board Resolution: Template for required corporate approvals
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