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An Investment agreement term sheet outlines the key terms and conditions between investors and companies seeking funding in Saudi Arabia. It acts as a preliminary document that captures the main points of a potential investment deal, including valuation, ownership stakes, and governance rights, before drafting the full legal agreement.

Following Saudi Capital Market Authority guidelines, these term sheets typically cover essential elements like Shariah compliance requirements, investment structure, board representation, and exit mechanisms. While not legally binding (except for confidentiality clauses), they help parties align expectations and serve as a roadmap for attorneys drafting the final investment documents.

Use an Investment agreement term sheet when entering serious investment discussions with potential funders in Saudi Arabia. This document becomes essential once initial talks progress beyond casual interest and both parties need to outline specific deal terms before investing time and resources in full legal documentation.

The term sheet proves particularly valuable during negotiations with venture capital firms, angel investors, or private equity groups operating under CMA regulations. It helps prevent misunderstandings about fundamental terms like valuation, voting rights, and Shariah compliance requirements while saving time and legal costs by addressing deal-breakers early in the process.

• Basic Investment Term Sheet: Outlines fundamental deal terms for early-stage investments, focusing on valuation, ownership percentages, and basic governance rights
• Shariah-Compliant Term Sheet: Incorporates Islamic finance principles and structures investments to meet religious requirements under Saudi law
• Series Funding Term Sheet: Used for larger institutional investments with complex rights, preferences, and exit mechanisms
• Strategic Investment Term Sheet: Designed for corporate investors seeking both financial returns and strategic partnerships
• Project-Specific Term Sheet: Tailored for specific sectors like technology or real estate, addressing unique regulatory and operational considerations

• Company Founders/Management: Initiate and negotiate term sheets when seeking capital, often working closely with their legal counsel to protect company interests
• Venture Capital Firms: Draft and propose investment terms, typically through their investment committees and legal teams
• Angel Investors: Review and negotiate term sheets for early-stage investments, often as part of investment syndicates
• Legal Counsel: Draft, review, and advise on term sheet provisions, ensuring CMA compliance and Shariah principles
• Financial Advisors: Support valuation discussions and structure financial terms aligned with Saudi market conditions

• Company Information: Gather detailed financial statements, business plans, and current capitalization tables
• Investment Details: Define investment amount, valuation expectations, and preferred investment structure under Shariah guidelines
• Governance Rights: Outline board composition, voting rights, and key decision-making thresholds
• Exit Mechanisms: Specify preferred exit timeframes and methods aligned with CMA regulations
• Legal Requirements: Ensure compliance with Saudi corporate law and include mandatory Shariah-compliant provisions
• Documentation Review: Use our platform to generate a compliant term sheet that includes all essential elements

• Investment Terms: Clear statement of investment amount, valuation, and ownership percentages
• Shariah Compliance: Explicit confirmation of Islamic finance principles and structures
• Governance Rights: Board composition, voting thresholds, and reserved matters
• Economic Rights: Dividend preferences, liquidation rights, and anti-dilution provisions
• Exit Mechanisms: Tag-along, drag-along rights, and IPO provisions
• Confidentiality: Binding non-disclosure terms for negotiation period
• Regulatory Compliance: References to CMA regulations and Saudi Companies Law requirements
• Binding Elements: Clear indication of which terms are legally binding versus non-binding

A key distinction exists between an Investment agreement term sheet and a Investment Agreement. While both documents relate to investment transactions, they serve different purposes and have distinct legal implications in Saudi Arabia's investment landscape.

• Legal Binding Status: Term sheets are largely non-binding (except for confidentiality provisions), serving as preliminary frameworks, while Investment Agreements are fully binding legal contracts
• Level of Detail: Term sheets outline key terms in summary form, while Investment Agreements contain comprehensive legal provisions, warranties, and obligations
• Timing and Use: Term sheets come first during negotiations to establish basic agreement on main points, while Investment Agreements finalize the detailed terms after due diligence
• Documentation Requirements: Term sheets need minimal formal documentation, while Investment Agreements require extensive supporting documents and often CMA approval