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The Founders Stock Agreement is a crucial document used during company formation in the United Arab Emirates, establishing the fundamental relationship between founding shareholders and the company. It becomes necessary when two or more founders are establishing a company in the UAE, whether in mainland UAE or in one of its free zones. The agreement must comply with UAE Federal Law No. 32 of 2021 and, where applicable, specific free zone regulations. It typically includes detailed provisions about share ownership, voting rights, transfer restrictions, vesting schedules, management rights, and exit provisions. This document is particularly important in the UAE context due to specific local requirements regarding ownership structures, board composition, and shareholder rights. The Founders Stock Agreement serves as a foundational document that helps prevent future disputes and provides clarity on crucial aspects of the company's ownership and management structure.

1. Parties: Identification of all founding shareholders and the company

2. Background: Context of the agreement, including company formation details and purpose

3. Definitions and Interpretation: Key terms used throughout the agreement

4. Share Capital Structure: Details of authorized and issued share capital, classes of shares

5. Share Subscription and Payment: Terms of initial share subscription and payment obligations

6. Founders' Commitments: Full-time commitment requirements, roles, and responsibilities

7. Board Composition and Management: Structure of board, appointment rights, voting requirements

8. Shareholder Meetings and Voting Rights: Procedures for meetings and voting requirements

9. Transfer Restrictions: Limitations on share transfers and right of first refusal

10. Tag-Along and Drag-Along Rights: Co-sale rights and forced sale provisions

11. Vesting Provisions: Share vesting schedule and conditions

12. Representations and Warranties: Standard declarations by founders and company

13. Confidentiality: Protection of company and founder confidential information

14. Term and Termination: Duration of agreement and termination circumstances

15. Governing Law and Jurisdiction: UAE law application and dispute resolution

16. General Provisions: Standard boilerplate clauses including notices, amendments, etc.