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Partnership Contract for Saudi Arabia

Partnership Contract Template for Saudi Arabia

A comprehensive legal agreement governed by Saudi Arabian law that establishes and regulates a business partnership between two or more parties. This document complies with the Saudi Companies Law of 2015 and incorporates Sharia law principles, defining the partners' rights, obligations, capital contributions, profit-sharing arrangements, and management structure. The agreement includes specific provisions for partnership governance, decision-making processes, and dispute resolution mechanisms while ensuring compliance with local regulatory requirements and Islamic commercial principles.

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What is a Partnership Contract?

The Partnership Contract is a fundamental legal document used in Saudi Arabia when two or more parties wish to establish a formal business partnership. This document is essential for creating various types of partnerships under Saudi Companies Law 2015, including general partnerships, limited partnerships, and professional partnerships. It must comply with both civil law requirements and Sharia principles, making it unique to the Saudi jurisdiction. The contract covers crucial elements such as capital contributions, profit-sharing mechanisms, management rights, and partner obligations. It's particularly important in the Saudi business context where partnerships are a common business structure, especially for professional services and family businesses. The document requires careful consideration of local regulatory requirements, including Ministry of Commerce regulations and foreign investment restrictions where applicable.

What sections should be included in a Partnership Contract?

1. Parties: Identification of all partners with full legal names, addresses, and official identification numbers

2. Background: Context of the partnership formation and partners' intention to establish the partnership

3. Definitions: Definitions of key terms used throughout the agreement

4. Partnership Name and Purpose: Official name of the partnership and detailed description of business activities

5. Term of Partnership: Duration of the partnership and conditions for renewal

6. Capital Contributions: Detailed breakdown of each partner's capital contribution, whether monetary or in-kind

7. Profit and Loss Distribution: Agreement on how profits and losses will be shared among partners

8. Management and Administration: Management structure, decision-making process, and partners' roles

9. Partners' Rights and Obligations: Detailed listing of rights and responsibilities of each partner

10. Banking and Financial Matters: Banking arrangements, signing authorities, and financial management procedures

11. Partner Meetings: Procedures for regular and special partner meetings, voting rights, and quorum requirements

12. Books and Records: Requirements for maintaining partnership records and access rights

13. Transfer of Partnership Interest: Rules governing the transfer of partnership interests and admission of new partners

14. Dissolution and Liquidation: Circumstances and procedures for partnership dissolution and asset distribution

15. Governing Law and Jurisdiction: Confirmation of Saudi law application and jurisdiction for disputes

What sections are optional to include in a Partnership Contract?

1. Non-Competition: Restrictions on partners engaging in competing businesses - include when partners have other business interests

2. Intellectual Property Rights: IP ownership and usage rights - include when the partnership involves creation or use of intellectual property

3. Zakat and Tax Matters: Specific arrangements for handling Zakat and tax obligations - include for larger partnerships

4. Insurance: Insurance requirements and responsibilities - include for partnerships with significant physical assets or risks

5. Environmental Compliance: Environmental obligations and compliance - include for partnerships in industrial or environmental-sensitive sectors

6. Foreign Partner Provisions: Special provisions for foreign partners - include when partnership involves non-Saudi partners

7. Shariah Compliance: Detailed Shariah compliance requirements - include for partnerships requiring strict Islamic finance compliance

What schedules should be included in a Partnership Contract?

1. Schedule 1 - Capital Contributions: Detailed breakdown of each partner's initial and subsequent capital contributions

2. Schedule 2 - Profit Sharing Ratios: Detailed formula and calculations for profit and loss distribution

3. Schedule 3 - Business Plan: Initial business plan and strategic objectives of the partnership

4. Schedule 4 - Partner Information: Detailed partner information including copies of IDs and contact details

5. Schedule 5 - Management Structure: Organizational chart and detailed management responsibilities

6. Schedule 6 - Asset Register: List of partnership assets and their valuations

7. Appendix A - Required Licenses: Copies of all required business licenses and permits

8. Appendix B - Banking Arrangements: Details of bank accounts 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

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions










































Clauses













































Relevant Industries

Retail

Manufacturing

Professional Services

Construction

Trading

Technology

Healthcare

Education

Real Estate

Hospitality

Consulting

Agriculture

Logistics

Financial Services

Industrial

Relevant Teams

Legal

Finance

Compliance

Corporate Governance

Risk Management

Business Development

Operations

Investment

Tax

Shariah Advisory

Corporate Affairs

Administrative

Relevant Roles

Legal Counsel

Managing Partner

Business Development Manager

Chief Executive Officer

Chief Financial Officer

Company Secretary

Compliance Officer

Corporate Lawyer

Investment Manager

Operations Director

Partnership Manager

Risk Manager

Senior Partner

Shariah Compliance Officer

Tax Advisor

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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