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Partnership Separation Agreement for Saudi Arabia

Partnership Separation Agreement Template for Saudi Arabia

A comprehensive legal document governed by Saudi Arabian law and Sharia principles that formalizes the dissolution of a partnership and establishes the terms and conditions for separating business interests. The agreement details the division of assets, allocation of liabilities, handling of ongoing contracts, and future obligations of the separating partners. It ensures compliance with Saudi Companies Law 2015 (as amended) and includes necessary provisions for commercial registration modifications, financial settlements, and dispute resolution mechanisms while maintaining Sharia compliance throughout.

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What is a Partnership Separation Agreement?

The Partnership Separation Agreement is a crucial document used when business partners in Saudi Arabia decide to end their business relationship and divide their shared enterprise. This document is essential for ensuring a smooth, legally compliant dissolution process under Saudi Arabian law and Sharia principles. It becomes necessary when partners decide to part ways due to various circumstances such as retirement, strategic disagreements, or pursuit of different business interests. The agreement must comply with the Saudi Companies Law 2015 (as amended) and include comprehensive provisions for asset division, liability allocation, employee handling, and ongoing business obligations. It typically requires approval from the Ministry of Commerce and must be properly notarized to be legally effective. The document serves as a roadmap for the separation process and helps prevent future disputes by clearly documenting all agreed terms.

What sections should be included in a Partnership Separation Agreement?

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

2. Background: History of the partnership, reference to original partnership agreement, and reasons for separation

3. Definitions: Key terms used throughout the agreement, ensuring clarity and legal precision

4. Effective Date of Separation: Specific date when the separation becomes effective and the partnership is dissolved

5. Asset Division: Detailed provisions for the division and transfer of partnership assets, including physical assets, accounts, and contracts

6. Financial Settlement: Terms of financial settlement between partners, including capital accounts, profits, and losses

7. Liabilities and Obligations: Allocation of existing liabilities and ongoing obligations between partners

8. Client and Contract Arrangements: Handling of existing client relationships and contracts post-separation

9. Confidentiality: Ongoing obligations regarding confidential information and trade secrets

10. Non-Competition and Non-Solicitation: Restrictions on future business activities and client/employee solicitation

11. Release and Waiver: Mutual release of claims and waiver of rights related to the partnership

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

13. Governing Law: Confirmation of Saudi law application and Sharia compliance

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

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

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

2. Ongoing Projects: Handling of incomplete projects and work in progress at time of separation

3. Employee Arrangements: Transfer or retention of employees if the partnership has staff

4. Tax Provisions: Specific tax and Zakat arrangements if complex tax implications exist

5. Insurance and Indemnification: Special insurance arrangements and indemnification provisions for specific risks

6. Transition Services: Temporary services provided between partners during separation period

7. Brand and Name Usage: Rights to use partnership name and branding post-separation

8. Real Estate: Specific provisions for handling real estate assets if applicable

What schedules should be included in a Partnership Separation Agreement?

1. Schedule 1 - Asset Register: Comprehensive list of all partnership assets and their agreed distribution

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

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

4. Schedule 4 - Outstanding Liabilities: Detail of all debts, obligations, and their allocation

5. Schedule 5 - Intellectual Property Register: List of all IP rights and their agreed distribution

6. Schedule 6 - Ongoing Contracts: List of active contracts and their handling post-separation

7. Appendix A - Calculation Method: Detailed methodology for calculating final settlements

8. Appendix B - Timeline: Implementation timeline for separation activities

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

Construction

Trading

Manufacturing

Technology

Healthcare

Retail

Consulting

Financial Services

Agriculture

Education

Hospitality

Engineering

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Governance

Compliance

Operations

Risk Management

Business Development

Human Resources

Administration

Executive Leadership

Relevant Roles

Managing Partner

Business Owner

CEO

CFO

Legal Counsel

Corporate Lawyer

Business Development Manager

Financial Controller

Company Secretary

Operations Director

Risk Manager

Compliance Officer

Partner Relations Manager

Board Member

Managing 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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