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Funding Term Sheet for Saudi Arabia

Funding Term Sheet Template for Saudi Arabia

A comprehensive preliminary agreement that outlines the key terms and conditions for a proposed investment in a company under Saudi Arabian law. This document serves as the foundation for subsequent detailed investment agreements and typically includes essential elements such as valuation, investment amount, ownership structure, governance rights, and key investor protections. While generally non-binding except for specific provisions like confidentiality, it sets the framework for the final investment documentation and must comply with Saudi Arabian corporate, investment, and securities regulations, including specific requirements for foreign investors where applicable.

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Funding Term Sheet

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What is a Funding Term Sheet?

The Funding Term Sheet is a crucial document in Saudi Arabia's investment landscape, typically used during the preliminary stages of investment negotiations between companies seeking funding and potential investors. It serves as a blueprint for the final investment agreements, outlining key commercial and legal terms including valuation, investment structure, governance rights, and investor protections. While primarily non-binding, it provides a clear framework for subsequent detailed documentation and due diligence. The document must align with Saudi Arabian regulations, including the Companies Law, Capital Market Authority regulations, and where applicable, foreign investment rules. It's particularly important in the context of Saudi Arabia's Vision 2030 initiative, which encourages private sector investment and economic diversification. The term sheet should be drafted with consideration of both local legal requirements and international investment standards, making it suitable for both domestic and foreign investors.

What sections should be included in a Funding Term Sheet?

1. Parties: Identification of the company, current shareholders, and proposed investor(s)

2. Background: Brief description of the company, purpose of investment, and current capitalization

3. Definitions: Key terms used throughout the term sheet

4. Investment Terms: Amount of investment, valuation, and type of securities being issued

5. Pre-Money Valuation: Agreed company valuation before the investment

6. Ownership Structure: Post-investment capitalization table and ownership percentages

7. Investment Instrument: Details of the type of shares or instruments being issued

8. Closing Conditions: Prerequisites for completing the investment

9. Board Composition: Structure and composition of the board post-investment

10. Voting Rights: Voting rights attached to different share classes

11. Reserved Matters: Decisions requiring investor approval

12. Exit Rights: Terms related to company sale or IPO

13. Confidentiality: Obligations regarding confidential information

14. Governing Law: Specification of Saudi law as governing law and jurisdiction

What sections are optional to include in a Funding Term Sheet?

1. Anti-Dilution Rights: Protection against future down rounds - include for Series A or later investments

2. Preference Rights: Liquidation preferences and dividend rights - relevant for preferred share investments

3. Tag-Along Rights: Co-sale rights for investors - typically included in minority investments

4. Drag-Along Rights: Majority shareholder rights to force sale - include for significant investments

5. Founder Vesting: Vesting schedule for founder shares - relevant for early-stage investments

6. Information Rights: Investor information and inspection rights - for significant investments

7. ROFR/ROFO: Right of first refusal/offer on future shares - for strategic investors

8. Shari'ah Compliance: Islamic finance compliance terms - include if required by investors

9. Foreign Investment Provisions: Special provisions for foreign investors - include if investors are non-Saudi

What schedules should be included in a Funding Term Sheet?

1. Cap Table: Current and post-investment capitalization table

2. Key Terms Definition: Detailed definitions of technical terms used

3. Corporate Structure: Organization chart showing corporate structure

4. Reserved Matters List: Detailed list of matters requiring investor approval

5. Conditions Precedent: Detailed list of conditions to be met before closing

6. Warranties List: Key warranties to be provided in final documentation

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

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions





















































Clauses


































Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Education

Manufacturing

Real Estate

Telecommunications

Renewable Energy

Food and Beverage

Transportation

Media and Entertainment

Industrial Technology

Retail

Agriculture Technology

Relevant Teams

Legal

Finance

Corporate Development

Investment

Executive Leadership

Board of Directors

Compliance

Strategy

Business Development

Corporate Secretary Office

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Investment Manager

Legal Counsel

Corporate Lawyer

Investment Director

Venture Capital Associate

Private Equity Manager

Managing Partner

Business Development Director

Board Member

Company Secretary

Finance Director

Investment Analyst

Compliance Officer

Strategy Director

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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