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A Pro-rata side letter to Investment agreement gives existing investors the right to maintain their ownership percentage in future funding rounds under Qatari commercial law. It protects investors from dilution by allowing them to buy new shares at the same terms when a company raises additional capital.

These letters are especially important in Qatar's growing startup ecosystem, where companies often go through multiple funding rounds. They typically outline specific triggers for these rights, participation deadlines, and any exceptions under Qatar Financial Centre regulations. Foreign investors particularly value these protections when investing in Qatari businesses.

Use a Pro-rata side letter to Investment agreement when investing in Qatari startups or growth companies that are likely to need multiple rounds of funding. It's particularly valuable for early-stage investors who want to maintain their ownership percentage and voting power as the company grows and brings in new investors.

The right timing is during initial investment negotiations, before signing the main investment agreement. This is crucial in Qatar's venture capital landscape, where follow-on rounds often involve international investors. Adding this protection later becomes much more complicated, especially under Qatar Financial Centre regulations governing shareholder rights.

• Standard Pro-rata: Basic Pro-rata side letters to Investment agreements give investors the right to maintain their ownership percentage in future funding rounds under Qatar commercial law
• Full Participation: Expanded versions that include rights for all future rounds, not just the next immediate round
• Qualified Pro-rata: Modified versions that set minimum investment thresholds or specific triggering conditions under Qatar Financial Centre rules
• Limited Duration: Time-bound variations that expire after specific periods or funding events
• Conditional Pro-rata: Letters that activate only for certain types of funding rounds or when specific valuation targets are met

• Venture Capital Firms: Primary users who request Pro-rata rights to protect their investment positions in Qatari startups
• Angel Investors: Individual investors seeking to maintain their ownership percentage through future funding rounds
• Company Founders: Must understand and negotiate these rights as part of their capital raising strategy
• Corporate Lawyers: Draft and review these letters under Qatar Financial Centre regulations
• Investment Banks: Often advise on structuring these rights, especially for international investors entering Qatar's market
• Board Members: Need to approve and implement these rights during subsequent funding rounds

• Initial Investment Details: Gather current ownership percentages, investment amounts, and share classes under Qatar commercial law
• Future Round Terms: Define which funding events trigger pro-rata rights and participation deadlines
• Ownership Thresholds: Specify minimum investment requirements to maintain pro-rata rights
• Notice Requirements: Set clear timeframes for notifying investors of new rounds
• QFC Compliance: Ensure alignment with Qatar Financial Centre regulations on shareholder rights
• Shareholder Approval: Confirm existing agreements don't restrict these rights
• Documentation Review: Use our platform to generate a compliant letter that includes all required elements

• Parties: Full legal names and addresses of the investor and company under Qatar law
• Investment Details: Reference to original investment agreement and current shareholding
• Pro-rata Rights: Clear definition of participation rights in future funding rounds
• Notice Requirements: Specific timeframes for informing investors of new rounds
• Exercise Period: Deadlines for exercising pro-rata rights
• Governing Law: Explicit reference to Qatar or QFC jurisdiction
• Termination Conditions: Circumstances when pro-rata rights expire
• Execution Block: Authorized signature spaces with Qatar attestation requirements

A Pro-rata side letter to Investment agreement is often confused with a standard Investment Agreement, but they serve distinct purposes in Qatar's legal framework. While both deal with investment terms, their scope and application differ significantly.

• Primary Focus: Pro-rata side letters specifically protect future investment rights, while Investment Agreements cover the complete terms of the current investment round
• Timing of Use: Side letters supplement existing agreements, focusing on future rounds; Investment Agreements govern immediate funding transactions
• Legal Scope: Side letters are narrowly focused on maintaining ownership percentages, while Investment Agreements cover comprehensive rights, obligations, and governance
• Enforcement Under QFC: Side letters require specific reference to Qatar Financial Centre regulations for future round participation, whereas Investment Agreements establish broader current-round compliance