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Shareholder Withdrawal Agreement Template for United Arab Emirates

A comprehensive legal document governed by UAE law that formalizes the process of a shareholder's withdrawal from a company. The agreement outlines the terms and conditions of the withdrawal, including share valuation, payment terms, and post-withdrawal obligations, while ensuring compliance with UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and other relevant UAE regulations. It addresses key aspects such as share transfer mechanics, confidentiality obligations, non-compete provisions, and dispute resolution mechanisms, providing legal protection for all parties involved in the transaction.

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What is a Shareholder Withdrawal Agreement?

The Shareholder Withdrawal Agreement is a crucial document used when a shareholder wishes to exit their ownership position in a UAE company, whether due to retirement, strategic realignment, or other business reasons. It is essential for companies registered both in UAE mainland and free zones, requiring compliance with UAE Federal Law No. 32 of 2021 and relevant free zone regulations where applicable. The agreement comprehensively addresses share valuation, transfer mechanisms, payment structures, and continuing obligations, while incorporating necessary provisions for UAE regulatory compliance and Sharia law considerations. This document is particularly important in the UAE business context, where clear documentation of ownership changes is required for various regulatory bodies, including the Economic Department or relevant free zone authorities.

What sections should be included in a Shareholder Withdrawal Agreement?

1. Parties: Identification of the withdrawing shareholder, remaining shareholders, and the company

2. Background: Context of the withdrawal, including current shareholding structure and reason for withdrawal

3. Definitions: Key terms used throughout the agreement

4. Share Ownership Confirmation: Statement of current shareholding and confirmation of legal title

5. Withdrawal Terms: Core terms of the withdrawal including effective date and process

6. Share Valuation: Agreed methodology for valuing the shares and determination of purchase price

7. Payment Terms: Structure and timing of payment for the shares

8. Completion Mechanics: Steps to be taken to complete the withdrawal and transfer of shares

9. Warranties and Representations: Standard warranties from both withdrawing and remaining shareholders

10. Confidentiality: Obligations regarding confidential information

11. Non-Compete and Non-Solicitation: Restrictions on the withdrawing shareholder's future activities

12. Release and Waiver: Mutual release of claims post-withdrawal

13. Governing Law and Jurisdiction: Confirmation of UAE law application and dispute resolution mechanism

14. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

What sections are optional to include in a Shareholder Withdrawal Agreement?

1. Earn-Out Provisions: Used when part of the withdrawal payment is contingent on future performance

2. Installment Payment Structure: Included when the purchase price is to be paid in installments

3. Continuing Obligations: Required when the withdrawing shareholder maintains certain responsibilities post-withdrawal

4. Tax Provisions: Necessary when specific tax implications need to be addressed

5. Intellectual Property Rights: Include when IP ownership or licenses need to be addressed

6. Outstanding Loans and Liabilities: Required when there are shareholder loans or personal guarantees to be addressed

7. Management Transition: Needed when the withdrawing shareholder holds management positions

8. Free Zone Specific Provisions: Required for companies operating in UAE free zones

What schedules should be included in a Shareholder Withdrawal Agreement?

1. Schedule 1 - Share Certificate Details: Details of share certificates being transferred

2. Schedule 2 - Valuation Report: Independent valuation report or agreed valuation calculations

3. Schedule 3 - Payment Schedule: Detailed payment terms and dates if applicable

4. Schedule 4 - Company Assets and Liabilities: Current financial position of the company

5. Schedule 5 - Required Corporate Approvals: List of necessary approvals and resolutions

6. Appendix A - Share Transfer Forms: Required transfer documentation for UAE authorities

7. Appendix B - Resignation Letters: Template resignation letters from relevant positions

8. Appendix C - Release Documentation: Forms for release from guarantees and obligations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Publisher

Ƶ

Cost

Free to use

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