������Ƶ

An Equity Participation Agreement lets investors buy ownership stakes in UAE companies without taking full control. These contracts spell out how much equity the investor gets, what rights come with it, and how profits will be shared - all while following UAE Commercial Companies Law.

Common in Dubai's real estate and tech sectors, these agreements help businesses raise capital while keeping their core operations intact. They must comply with UAE foreign ownership rules and often include key provisions about board representation, dividend rights, and exit strategies. Local regulatory approval might be needed, especially when foreign investors are involved.

Use an Equity Participation Agreement when bringing new investors into your UAE business without giving up complete control. This works especially well for startups seeking growth capital, family businesses looking to expand, or companies needing strategic partners while maintaining their core identity.

The agreement becomes crucial during business expansion phases, joint ventures, or when attracting foreign investment under UAE ownership laws. It helps structure complex ownership arrangements, particularly in free zones where different investment rules apply. Many UAE tech companies and real estate developers use these agreements to fund new projects while keeping their management rights intact.

• Basic Minority Investment: Used for simple equity stakes below 49% in UAE mainland companies, focusing on profit sharing and basic voting rights
• Strategic Partnership: Includes detailed management rights, board seats, and veto powers - popular in tech and real estate sectors
• Free Zone Structure: Tailored for UAE free zones where 100% foreign ownership is permitted, with specific governance provisions
• Family Business Version: Designed for family-owned UAE companies, incorporating succession planning and family council rights
• Project-Specific: Common in real estate and construction, linking equity participation to specific development projects

• Investing Companies: Local or foreign entities seeking to acquire partial ownership in UAE businesses, often bringing capital and expertise
• Target Companies: UAE-based businesses looking to raise funds while maintaining operational control
• Corporate Lawyers: Draft and review agreements to ensure compliance with UAE Commercial Companies Law
• Board Members: Review and approve terms, particularly regarding governance rights and profit distribution
• Regulatory Bodies: Including the Department of Economic Development and free zone authorities who may need to approve the agreement

• Company Details: Gather both parties' trade licenses, shareholder information, and board resolutions approving the investment
• Investment Structure: Define exact equity percentage, valuation basis, and payment terms
• Governance Rights: Outline board representation, voting rights, and key decision thresholds
• Regulatory Compliance: Check UAE foreign ownership restrictions and free zone regulations if applicable
• Exit Mechanisms: Specify conditions for share transfers, tag-along rights, and dispute resolution procedures
• Document Generation: Use our platform to create a legally-sound agreement that incorporates all essential elements under UAE law

• Party Details: Full legal names, trade license numbers, and authorized signatories of all participating entities
• Investment Terms: Precise equity percentage, valuation, and payment structure aligned with UAE Commercial Companies Law
• Governance Rights: Board representation, voting mechanisms, and management participation limits
• Profit Distribution: Clear formula for dividend allocation and profit sharing arrangements
• Exit Provisions: Transfer restrictions, tag-along rights, and put/call options following UAE regulations
• Dispute Resolution: UAE court jurisdiction or arbitration clause, governing law statement
• Regulatory Compliance: References to relevant UAE ownership restrictions and free zone requirements

An Equity Participation Agreement differs significantly from a Simple Agreement for Future Equity (SAFE) in several key aspects under UAE law. While both involve company ownership, their structure and timing are quite different.

• Immediate vs. Future Rights: Equity Participation Agreements grant immediate ownership stakes, while SAFEs only promise future equity upon triggering events like funding rounds
• Valuation Requirements: Equity Participation needs current company valuation, but SAFEs defer valuation until later investment rounds
• Governance Rights: Equity Participation typically includes immediate voting and board rights; SAFEs don't grant these until conversion
• Regulatory Approval: Equity Participation often requires immediate UAE regulatory clearance, while SAFEs may delay this until conversion
• Documentation Complexity: Equity Participation Agreements are more complex, requiring detailed current ownership structures and governance provisions