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Partner Separation Agreement for Saudi Arabia

Partner Separation Agreement Template for Saudi Arabia

A Partner Separation Agreement under Saudi Arabian law is a comprehensive legal document that formalizes the dissolution of a business partnership and establishes the terms and conditions for separating partners. This document, governed by Saudi Arabian Companies Law and Sharia principles, outlines the division of assets, allocation of liabilities, client distribution, and ongoing obligations of the separating parties. It includes essential provisions for financial settlements, confidentiality, non-compete clauses, and dispute resolution mechanisms, all while ensuring compliance with local regulatory requirements and commercial practices.

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What is a Partner Separation Agreement?

The Partner Separation Agreement is a crucial document used when business partners in Saudi Arabia decide to end their business relationship and go their separate ways. This agreement becomes necessary when partners choose to dissolve their partnership due to various reasons such as retirement, strategic disagreements, or pursuit of different business interests. The document must comply with Saudi Arabian Companies Law, Commercial Court Law, and Sharia principles, making it essential to include specific provisions that address local legal requirements. The agreement typically covers detailed terms for asset division, liability allocation, client distribution, and post-separation obligations, while also addressing any foreign investment considerations if applicable. It serves as a comprehensive roadmap for the separation process, helping to minimize disputes and ensure a smooth transition for all parties involved.

What sections should be included in a Partner Separation Agreement?

1. Parties: Identification of all partners involved in the separation, including their full legal names, addresses, and registration details

2. Background: Brief history of the partnership, reason for separation, and current status of the business

3. Definitions: Key terms used throughout the agreement defined for clarity and legal certainty

4. Effective Date of Separation: Specific date when the separation becomes effective and its implementation timeline

5. Asset Division: Detailed breakdown of how partnership assets will be divided, including physical assets, bank accounts, and investments

6. Financial Settlement: Terms of financial settlement between partners, including any buy-out arrangements and payment schedules

7. Liabilities and Debts: Allocation of existing liabilities and debts between partners

8. Client and Contract Assignment: Distribution and assignment of existing clients and contracts between separating partners

9. Confidentiality: Obligations regarding confidential information and trade secrets post-separation

10. Non-Compete and Non-Solicitation: Restrictions on competitive activities and client/employee solicitation

11. Release and Indemnification: Mutual release of claims and indemnification provisions

12. Dispute Resolution: Procedures for resolving any disputes arising from the separation agreement

13. Governing Law: Specification of Saudi law as governing law and relevant jurisdictional matters

14. General Provisions: Standard legal provisions including severability, entire agreement, and amendments

What sections are optional to include in a Partner Separation Agreement?

1. Intellectual Property Rights: Division of intellectual property rights when the partnership owns significant IP assets

2. Employee Matters: Provisions regarding the transfer or retention of employees when the partnership has staff

3. Ongoing Projects: Handling of incomplete projects and their transition when there are active projects during separation

4. Property Leases: Transfer or termination of property leases when the partnership holds lease agreements

5. Insurance Matters: Provisions regarding insurance policies and claims when there are significant insurance considerations

6. Tax Matters: Specific tax and zakat considerations when complex tax implications exist

7. Foreign Investment Provisions: Additional provisions when one or more partners are foreign investors

8. Marketing and Public Relations: Guidelines for announcing the separation when public relations impact is significant

What schedules should be included in a Partner Separation Agreement?

1. Schedule 1 - Asset Register: Detailed inventory of all partnership assets and their agreed distribution

2. Schedule 2 - Financial Statement: Current financial position of the partnership including balance sheet and profit/loss statement

3. Schedule 3 - Client List: Complete list of clients and their agreed allocation between partners

4. Schedule 4 - Outstanding Liabilities: List of all debts, loans, and liabilities with allocation details

5. Schedule 5 - Payment Schedule: Detailed schedule of any payments to be made between partners

6. Appendix A - Property Documentation: Copies of property titles, leases, or transfer documents

7. Appendix B - Corporate Documents: Relevant corporate registrations and licenses requiring amendment

8. Appendix C - Valuation Reports: Independent valuations of business assets or shares

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

Professional Services

Real Estate

Manufacturing

Trading

Construction

Technology

Retail

Healthcare

Education

Hospitality

Consulting

Financial Services

Transportation

Agriculture

Energy

Relevant Teams

Legal

Finance

Compliance

Corporate Governance

Risk Management

Operations

Business Development

Human Resources

Strategy

Administrative

Relevant Roles

Managing Partner

CEO

Business Owner

Legal Counsel

Corporate Lawyer

Chief Financial Officer

Finance Director

Business Development Director

Operations Manager

Compliance Officer

Risk Manager

Company Secretary

Partnership Manager

Board Member

Commercial 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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