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An Investment agreement term sheet lays out the key points of a potential investment deal in the UAE, working like a roadmap before the full agreement. It captures essential details like investment amount, company valuation, investor rights, and key terms that both parties have preliminarily agreed upon.

While not legally binding in most UAE jurisdictions (except for confidentiality clauses), these term sheets save time and money by getting major deal points settled early. They're especially common in Dubai International Financial Centre (DIFC) transactions, where investors and startups use them to quickly outline their mutual understanding before involving lawyers in detailed documentation.

Use an Investment agreement term sheet when you're ready to formalize investment discussions but before drafting extensive legal documents. It's particularly valuable in UAE venture capital deals, angel investments, or when negotiating with institutional investors from Abu Dhabi or Dubai's financial centers.

The term sheet becomes essential during early-stage funding rounds, helping avoid misunderstandings about valuation, share classes, or board rights. Many UAE entrepreneurs prepare it when approaching multiple investors, as it streamlines negotiations and shows professional readiness. It's also crucial when dealing with international investors who need clarity on local investment structures and Sharia compliance requirements.

• Standard Equity Investment term sheets: Used for straightforward company investments in UAE mainland companies, covering basic terms like valuation, share price, and voting rights
• DIFC-Specific term sheets: Tailored for Dubai International Financial Centre deals with specialized provisions for free zone regulations and international investor requirements
• Convertible Note term sheets: Popular among UAE tech startups, outlining terms for debt that converts to equity, including conversion triggers and caps
• Sharia-Compliant term sheets: Modified to ensure alignment with Islamic finance principles, commonly used in UAE financial centers

• Startup Founders: Initiate and negotiate term sheets when seeking investment, often working with their legal advisors to protect company interests
• Venture Capital Firms: Draft and propose term sheets to UAE startups, typically through their investment committees and legal teams
• Angel Investors: Use simplified term sheets for early-stage investments in UAE companies, particularly in tech and innovation sectors
• Corporate Lawyers: Review and refine Investment agreement term sheets to ensure compliance with UAE regulations and DIFC requirements
• Investment Banks: Prepare term sheets for larger institutional deals, especially in Dubai's financial district

• Company Details: Gather current capitalization table, financial statements, and UAE business license information
• Investment Structure: Define investment amount, valuation, and type of securities being offered
• Key Terms: List investor rights, board representation, and any special privileges or restrictions
• Regulatory Compliance: Check DIFC or mainland UAE requirements based on your company's registration
• Exit Provisions: Outline drag-along rights, tag-along rights, and future funding rounds
• Confidentiality: Include standard non-disclosure provisions that comply with UAE law

• Investment Terms: Clear statement of investment amount, valuation, and share price or percentage
• Company Information: Legal name, registration details, and current shareholding structure
• Investor Rights: Voting rights, board seats, and any veto powers over major decisions
• Anti-dilution: Protection mechanisms for future funding rounds under UAE regulations
• Exit Provisions: Tag-along and drag-along rights compliant with UAE corporate law
• Governing Law: Specify UAE or DIFC jurisdiction and dispute resolution method
• Confidentiality: Non-disclosure terms and information handling requirements

A term sheet differs significantly from a full Investment Agreement in several key ways. While both documents deal with investment transactions, they serve distinct purposes in the UAE business landscape.

• Legal Binding: Term sheets are largely non-binding (except for confidentiality clauses), while Investment Agreements are fully binding legal contracts
• Detail Level: Term sheets provide a high-level outline of key terms, while Investment Agreements contain comprehensive legal provisions and precise obligations
• Timing: Term sheets come first as negotiation tools, while Investment Agreements represent the final, executed deal
• Documentation: Term sheets typically run 5-10 pages, while Investment Agreements can exceed 50 pages with detailed exhibits and schedules
• Legal Requirements: Investment Agreements must meet strict UAE corporate law requirements, while term sheets have more flexibility in format and content