Signing an agreement to confirm investment until the company license is issued

Dear Client,

Thanks for your question! I hope you are doing well. I will definitely assist you in this matter.

Certainly! You can sign a preliminary agreement with your investor as individuals to confirm the investment, with the understanding that it will be replaced by a formal agreement when the company is formed.

Consult with us for proper drafting.

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ABDUL WAHIED

Dear Questioner,

Yes, it is possible to sign an agreement between yourself and the investor as individuals to verify his investment before the company is formed.

This agreement would be considered a bridge agreement or pre-incorporation agreement, and it would essentially hold the investor's investment in place until the company is formed and a formal investment agreement can be executed.

If you want, we can provide you with the service for drafting such an agreement.

Do confirm if you want to go with our services.

Dear Inquirer,

Hope you are doing well!

Kindly note that we can manage the agreement and include all the protection clauses for your rights.

If you have any other queries, you can reach us through email or phone.

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Thank you!

Best Regards,

MennaTullah

In the context of UAE law, setting up an agreement between individuals prior to the formation of a company, and then replacing it with a formal agreement between the company and the investor after incorporation, is a feasible approach.

However, it's important to ensure that both agreements are legally sound and reflect the intentions of all parties involved. Here is a general outline of how you might structure these agreements:

1- Preliminary Individual Agreement

Parties Involved: Clearly identify yourself and the investor as individuals entering into the agreement.

2- Purpose of the Agreement: State that the purpose is to outline the terms of the investment pending the formation of the company.

3- Investment Details: Specify the amount to be invested, the purpose of these funds, and any conditions tied to their use.

4- Duration and Transition: Clearly mention that this agreement is temporary and is intended to be replaced by a formal corporate agreement once the company is legally established.

5- Replacement Clause: Include a clause stating that this agreement will become void and be replaced by a new agreement between the investor and the newly formed company.

6- Governing Law and Dispute Resolution: Indicate that the agreement is subject to UAE law and outline how disputes, if any, will be resolved.

Subsequent Corporate Agreement

Once the company is formed:

1- Parties Involved: This agreement would be between the newly formed company and the investor.

2- Ratification of Initial Terms: The agreement should recognize and formalize the initial investment terms agreed upon in the preliminary agreement.

3- Adjustments and Additional Terms: Include any adjustments or additional terms relevant to the corporate structure, such as equity distribution, investor’s rights, and responsibilities.

4- Governing Law and Jurisdiction: Reiterate that this agreement is governed by UAE law and specify the jurisdiction for dispute resolution.

General Tips:

1- Legal Advice: Given the complexities of such agreements, especially in the context of UAE law, it is strongly advised to consult with a legal expert or a lawyer specializing in corporate law in the UAE. They can ensure that the agreements are legally binding and compliant with local laws and regulations.

2- Transparency and Clarity: Ensure that all terms are clearly defined and understood by both parties to avoid any misunderstandings or disputes in the future.

3- Documentation and Witnesses: Make sure all agreements are documented in writing and duly signed by both parties. It’s also advisable to have witnesses or legal acknowledgment.

Remember, this is a general guideline, and the specific details of your agreements should be tailored to your unique situation and reviewed by a legal professional.

Regards,

Omar Mosaad

O.S Legal