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Convertible Note Purchase Agreement Template for Saudi Arabia

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Key Requirements PROMPT example:

Convertible Note Purchase Agreement

"I need a Convertible Note Purchase Agreement for my Riyadh-based technology startup to secure SAR 2 million in funding from a UAE-based venture capital firm, with a valuation cap of SAR 20 million and planned conversion by March 2025."

Document background
The Convertible Note Purchase Agreement is a crucial financing instrument in Saudi Arabia's growing startup and scale-up ecosystem, aligned with Vision 2030's emphasis on private sector growth and innovation. This document is typically used when companies seek bridge financing or early-stage investment while deferring formal valuation. It must be structured to comply with both Saudi Arabian commercial law and Shariah principles, replacing conventional interest with acceptable profit-sharing mechanisms. The agreement details the terms of the investment, conversion mechanics, investor rights, and company obligations, while incorporating necessary provisions for regulatory compliance, including Capital Market Authority regulations and foreign investment rules where applicable. The document is particularly relevant in the context of Saudi Arabia's expanding venture capital market and increasing focus on technology and innovation sectors.
Suggested Sections

1. Parties: Identification of the Company (Issuer) and the Purchaser(s) of the convertible note

2. Background: Context of the transaction, including company status and purpose of the financing

3. Definitions: Definitions of key terms used throughout the agreement, including Shariah-compliant financing terms

4. Purchase and Sale of Notes: Terms of the note purchase, including purchase price and closing mechanics

5. Profit Rate and Payment: Shariah-compliant profit rate structure and payment terms (avoiding conventional interest)

6. Conversion Rights: Terms and conditions for converting the notes into equity, including conversion price and mechanics

7. Conversion Mechanics: Detailed procedures for executing the conversion of notes to equity

8. Company Representations and Warranties: Company's declarations regarding its legal status, authority, and business condition

9. Purchaser Representations and Warranties: Purchaser's declarations regarding authority, investment intent, and compliance with laws

10. Covenants: Ongoing obligations of the Company during the term of the notes

11. Events of Default: Circumstances constituting default and consequences thereof

12. Shariah Compliance: Provisions ensuring the agreement complies with Islamic finance principles

13. Miscellaneous: Standard legal provisions including notices, amendments, governing law, and dispute resolution

Optional Sections

1. Information Rights: Additional information and inspection rights for noteholders, typically included for larger investments

2. Board Observer Rights: Rights of noteholders to appoint board observers, included for strategic investors

3. Pre-emptive Rights: Rights of noteholders to participate in future financing rounds, optional for larger investors

4. Most Favored Nation Provision: Protection ensuring noteholders receive the benefit of better terms offered to future investors

5. Anti-dilution Protection: Additional protection against dilution beyond standard conversion adjustments

6. Registration Rights: Rights related to future public offerings, included if an IPO is contemplated

7. Tag-Along Rights: Rights to participate in future share sales, included for significant investments

8. Foreign Investment Provisions: Additional provisions required when the purchaser is a foreign investor

Suggested Schedules

1. Schedule A - Form of Note: The formal promissory note document

2. Schedule B - Capitalization Table: Current and pro-forma capitalization of the Company

3. Schedule C - Corporate Documents: Key corporate documents including registration certificates and licenses

4. Schedule D - Disclosure Schedule: Exceptions to representations and warranties

5. Schedule E - Shariah Compliance Certificate: Certificate from recognized Shariah advisor confirming compliance

6. Appendix 1 - Conversion Notice: Form of notice to be used when exercising conversion rights

7. Appendix 2 - Regulatory Compliance Checklist: Checklist ensuring compliance with Saudi Arabian regulations

8. Appendix 3 - Required Consents: List of required governmental and third-party consents

Authors

Alex Denne

Head of Growth (Open Source Law) @ 黑料视频 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions
Clauses



































Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Education Technology

Clean Energy

Manufacturing

Logistics

Real Estate Technology

Food and Beverage

Digital Media

Software Development

Biotechnology

Agricultural Technology

Islamic Financial Services

Relevant Teams

Legal

Finance

Corporate Development

Treasury

Compliance

Executive Leadership

Investment

Corporate Governance

Risk Management

Islamic Finance

Strategic Planning

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Investment Manager

Corporate Lawyer

Shariah Compliance Officer

Venture Capital Associate

Investment Director

Company Secretary

Finance Director

Legal Counsel

Corporate Development Manager

Treasury Manager

Board Member

Startup Founder

Managing Partner

Investment Analyst

Compliance Officer

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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