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Capital Contribution Partnership Agreement for Saudi Arabia

Capital Contribution Partnership Agreement Template for Saudi Arabia

This document establishes a formal partnership structure under Saudi Arabian law, specifically governed by the Saudi Companies Law of 2015 and relevant Ministry of Commerce regulations. It details the capital contributions of each partner, whether monetary or in-kind, and establishes the framework for profit sharing, management rights, and partner obligations. The agreement includes provisions for Shariah compliance and incorporates specific requirements for both local and foreign partners, making it suitable for various business ventures within the Kingdom. It addresses key aspects such as partnership formation, capital structure, management control, and dispute resolution mechanisms in accordance with Saudi legal requirements.

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What is a Capital Contribution Partnership Agreement?

The Capital Contribution Partnership Agreement is a fundamental document used in Saudi Arabia when two or more parties wish to establish a formal partnership with defined capital contributions. This agreement is particularly important in the Saudi business context as it must comply with both the Saudi Companies Law of 2015 and Shariah principles. It is commonly used for new business ventures, joint investments, and professional services partnerships where partners contribute different forms of capital (cash, assets, or expertise). The document outlines critical elements such as profit/loss sharing ratios, management responsibilities, and partner obligations while ensuring compliance with local regulations, including foreign investment rules where applicable. This type of agreement is essential for protecting partners' interests and providing a clear framework for business operations within the Saudi legal system.

What sections should be included in a Capital Contribution Partnership Agreement?

1. Parties: Identification of all partners, including full legal names, addresses, and commercial registration numbers if applicable

2. Background: Context of the partnership formation and brief description of partners' intention to form the partnership

3. Definitions: Key terms used throughout the agreement, including technical, financial, and legal terminology

4. Partnership Formation: Declaration of partnership formation, its name, purpose, and principal place of business

5. Capital Contributions: Detailed description of each partner's capital contribution, whether monetary or in-kind, and valuation methods

6. Profit and Loss Distribution: Framework for sharing profits and losses among partners, including distribution mechanisms and timing

7. Management and Control: Partnership management structure, decision-making processes, and voting rights

8. Partner Rights and Obligations: Detailed responsibilities and rights of each partner, including participation in management

9. Books and Records: Requirements for maintaining partnership accounts, records, and financial statements

10. Transfer of Partnership Interests: Rules governing the transfer of partnership interests, including restrictions and procedures

11. Term and Termination: Duration of partnership and circumstances under which it may be terminated

12. Governing Law and Dispute Resolution: Specification of Saudi law as governing law and dispute resolution mechanisms

13. General Provisions: Standard clauses including notices, amendments, and severability

What sections are optional to include in a Capital Contribution Partnership Agreement?

1. Shariah Compliance: Specific provisions ensuring compliance with Shariah principles, required when partners want explicit Shariah compliance confirmation

2. Foreign Investment Provisions: Additional provisions required when one or more partners are foreign entities

3. Intellectual Property Rights: Provisions dealing with IP ownership and usage when the partnership involves intellectual property

4. Non-Competition: Restrictions on partners' ability to compete with the partnership, used when partners have other business interests

5. Key Person Insurance: Requirements for insurance on key partners, relevant for partnerships heavily dependent on certain individuals

6. Exit Strategy: Detailed procedures for partner exit, including buy-out provisions, used in larger or more complex partnerships

What schedules should be included in a Capital Contribution Partnership Agreement?

1. Schedule 1 - Capital Contributions: Detailed breakdown of each partner's capital contribution, including valuation reports for in-kind contributions

2. Schedule 2 - Business Plan: Initial business plan and financial projections of the partnership

3. Schedule 3 - Management Structure: Detailed organizational structure and management procedures

4. Schedule 4 - Partner Information: Detailed information about each partner, including copies of IDs and commercial registrations

5. Schedule 5 - Assets Schedule: List and description of any assets being transferred to the partnership

6. Appendix A - Power of Attorney: Standard form of power of attorney for partnership matters

7. Appendix B - Bank Account Operating Mandate: Banking arrangements and authorized signatories

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

Real Estate

Trading

Professional Services

Technology

Construction

Healthcare

Education

Retail

Hospitality

Logistics

Industrial

Financial Services

Agriculture

Mining

Relevant Teams

Legal

Finance

Corporate Affairs

Compliance

Risk Management

Business Development

Investment

Corporate Governance

Commercial Operations

Strategic Planning

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Corporate Lawyer

Investment Manager

Business Development Director

Managing Partner

Finance Director

Compliance Officer

Company Secretary

Board Member

Commercial Director

Partnership Manager

Risk Manager

Corporate Governance Officer

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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