Essential Clauses of Share Purchase and Assignment Agreements in UAE

A share purchase and assignment agreement is used whenever a company or individual is acquiring or selling the shares of a company. The legal document is legally binding, which means it obligates a seller and a buyer in selling and buying respective shares.

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Crucial elements of share purchase and assignment agreement in UAE 

  • Contracting parties – parties to a share purchase and assignment agreement include the buyer and the seller. 
  • Recitals – the clause include the factual objectives and background of the transaction, as well as the roles of each party to the agreement. 
  • Descriptions and interpretations – the definitions of legalese used in the agreement must be defined with regards to what they should mean in relation to their use in the share transfer and assignment agreement. Clauses in the agreement will be interpreted the same exact way as the descriptions of the phrases and words were stated. A definition, ideally, should be limited onto a term’s meaning. 
  • Sale of shares and considerations – the payment structure must be stated elaborately, including the sum that’s payable on the closing, the deposits that must be given during the time of the contract execution, amount that’s set off during breach of contract or warranties. All minor details are to be stated explicitly in the consideration terms. 
  • Condition precedent – the clause should state explicitly each party that’s responsible with permits, permissions, and authorizations. The clause should also be covering warranties, representations, obligations, as well as the execution of the contractual agreement. 
  • Condition subsequent – although rare, there are cases wherein the clause is required as the share purchase agreement is breached. A subsequent purchaser will be a safeguard. 
  • Closing – the clause must include details, including minor ones, such as place, time, and manner for how the closing will take place. 
  • Representation and warranties of the seller – the representation of the vendor with regards to number of shares and lists of directors. All other affirmative information that is provided by a vendor like pending dispute, accounts transparency, and loan information are to be included in the clause. The clause, therefore, should be open with regards to the rights of the vendor in selling shares of a company to the purchaser. 
  • Covenant by parties – it’s accommodated in order to give a certain level of comfort onto the contracting parties. It’s required from a seller regarding company management. 
  • Representations and warranties of the purchase – the clause is generally repeating in order to safeguard all parties’ interests. 
  • Confidentiality – it’s among the premium clauses for any share purchase and assignment agreement. The clause helps in sealing any information disclosed during negotiations and it ensures any disclosed information will not be revealed unless both parties give their consent. Confidential clauses often include a time duration for barring disclosure of confidential information. 
  • Notice – key points which must be in the clause are location of parties wherein notice is going to be dispatched, form, and format for acceptance. 
  • Indemnification – the clause deals with claim amount, time limit, subject matter, and procedure.
  • Force majeure – it’s for any unforeseen crisis, strengthening the parties to a share purchase and assignment agreement. It’s often for fluctuating markets and financial crisis. 
  • Jurisdiction and a general clause – court of the buyer’s city or location will have jurisdiction. 
  • Arbitration and dispute resolution – the clause should state procedural law, number of arbitrators, and rights of parties should there be a dispute. 
  • Termination – this clause has to specify clearly the process of agreement termination. 

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Is a share purchase agreement the same as an asset purchase and assignment agreement? 

A share purchase is the acquisition of share ownership for a particular company whereas an asset purchase is the sale of the assets and liabilities of a company. The assets of a company can include intellectual property, machinery, and goodwill.  

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Is a share purchase and assignment agreement necessary in UAE?

Yes, it is. A share purchase and assignment agreement in UAE will facilitate transfer of share ownership with economical ease. The legal document will eliminate the need of consent from creditors. The buyer will be acquiring the assets of the company and assume all rights, obligations, and liabilities. It’s absolutely vital for a buyer to exercise legal and financial due diligence in identifying hidden liabilities, ownership of assets, disputes, etc.

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Is notarization in UAE required for a share purchase agreement? 

Yes, notarizing a share purchase and assignment agreement will make the contract enforceable and legal in the eyes of the law. A public notary in Dubai that performs notarization on the legal document will provide a strong proof with regards to the authenticity of the document. 

If you want to know more about share purchase and assignment agreements and their notarization in UAE, contact us here in Notary Public Dubai today!