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Preliminary Partnership Agreement for Saudi Arabia

Preliminary Partnership Agreement Template for Saudi Arabia

A Preliminary Partnership Agreement under Saudi Arabian law is a foundational document that establishes the initial framework for a business partnership between two or more parties. This document outlines the basic terms and conditions for the proposed partnership while complying with Saudi Companies Law and Shariah principles. It serves as a stepping stone towards a final partnership agreement, covering essential aspects such as initial capital contributions, ownership structure, business objectives, and timeline for partnership formation. The agreement includes provisions for due diligence, confidentiality, and exclusivity during the preliminary phase, while ensuring alignment with Saudi regulatory requirements and business practices.

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What is a Preliminary Partnership Agreement?

The Preliminary Partnership Agreement is a critical document used in Saudi Arabia when parties are exploring a formal business partnership but need to establish initial terms before finalizing their relationship. This document becomes relevant when businesses or individuals have identified potential synergies and wish to formalize their intentions while conducting due diligence and negotiating detailed terms. It serves as a bridge between initial discussions and a final partnership agreement, providing protection for all parties during the exploratory phase. The agreement must comply with Saudi Companies Law, consider Shariah principles, and address any specific requirements related to foreign investment if applicable. It typically includes provisions for confidentiality, exclusivity, and the framework for moving towards a definitive agreement, while allowing flexibility for future negotiations.

What sections should be included in a Preliminary Partnership Agreement?

1. Parties: Identification of all parties to the agreement, including full legal names, addresses, and registration details

2. Background: Context of the proposed partnership, including the parties' intentions and general business objectives

3. Definitions: Key terms used throughout the agreement, ensuring clarity and consistency with Saudi legal terminology

4. Purpose of the Partnership: Detailed description of the intended business activities and objectives of the proposed partnership

5. Initial Contributions and Capital: Preliminary agreement on proposed capital contributions, both monetary and in-kind, subject to final agreement

6. Partnership Structure: Proposed legal structure of the partnership and preliminary ownership percentages

7. Due Diligence: Framework for conducting due diligence investigations and information sharing

8. Confidentiality: Obligations regarding confidential information exchanged during the preliminary phase

9. Exclusivity: Terms preventing parties from negotiating with other potential partners during the preliminary phase

10. Timeline and Next Steps: Schedule for developing the final partnership agreement and key milestones

11. Governing Law and Jurisdiction: Confirmation of Saudi law as governing law and jurisdiction for dispute resolution

12. Term and Termination: Duration of the preliminary agreement and circumstances for termination

What sections are optional to include in a Preliminary Partnership Agreement?

1. Regulatory Compliance: Specific section addressing compliance with Saudi regulations, particularly relevant if the partnership involves regulated industries

2. Shariah Compliance: Specific provisions ensuring compliance with Shariah principles, particularly relevant for financial services partnerships

3. Foreign Investment Provisions: Required when one or more partners are non-Saudi entities, addressing SAGIA requirements

4. Intellectual Property: Provisions regarding IP rights and their treatment during the preliminary phase, relevant when IP is a key asset

5. Employment Matters: Preliminary agreements regarding key personnel and employment structures, relevant for larger partnerships

6. Cost Sharing: Agreement on how preliminary expenses will be shared, relevant for complex partnerships requiring significant preparatory work

What schedules should be included in a Preliminary Partnership Agreement?

1. Schedule 1: Initial Business Plan: High-level outline of the proposed business activities and objectives

2. Schedule 2: Proposed Capital Structure: Preliminary breakdown of capital contributions and ownership structure

3. Schedule 3: Due Diligence Requirements: List of required documents and information for due diligence

4. Schedule 4: Timeline and Milestones: Detailed timeline for moving from preliminary to final agreement

5. Schedule 5: Required Approvals: List of regulatory and other approvals needed for the final partnership

6. Appendix A: Key Terms Sheet: Summary of key commercial terms agreed in principle

Authors

Alex Denne

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

Jurisdiction

Saudi Arabia

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions



































Clauses
































Relevant Industries

Manufacturing

Technology

Financial Services

Real Estate

Healthcare

Energy

Retail

Professional Services

Construction

Telecommunications

Tourism

Education

Agriculture

Transportation

Mining

Relevant Teams

Legal

Corporate Development

Strategy

Finance

Business Development

Compliance

Risk Management

Operations

Commercial

Executive Leadership

Investment

Corporate Affairs

Relevant Roles

Chief Executive Officer

Managing Director

Business Development Director

Legal Counsel

Chief Financial Officer

Investment Manager

Corporate Development Manager

Strategy Director

Partnership Manager

Operations Director

Commercial Director

Compliance Officer

Risk Manager

Board Member

General Counsel

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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