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An investment agreement is a contract between a company and its shareholders or a company and the individuals who invest in it, specifying the terms of an investment.
As a shareholder, the investor can be an existing shareholder of the company and therefore may already have entered into a shareholders’ agreement with the company and its shareholders at an early stage before any investment. Or the investor can be a new investor. The lead investor might represent a syndicate of investors.
Any investment agreement is likely to be tailored to suit the specific needs of the company and the investor, so it is important that the parties negotiate an agreement that suits their requirements.
The terms of an investment often include various conditions and risks that must be managed. Once a company has accepted investment, it can help to identify those
issues and ways to manage them. Start-up companies and early-stage investors may need to clarify the rights of both parties to ensure that no one takes on more risk than they’re willing to accept. Investment agreements provide a framework for how the parties to an investment will allocate risk and set out their rights and
obligations under the contract. They also include provisions to ensure that all parties know what to do if something goes wrong and one party wants to raise a
dispute or exit from the investment arrangements.
We offer a wide range of services related to investment agreements:
- Drafting and reviewing investment agreements;
- Negotiating new investment agreements;
- Negotiating amendments to existing investment agreements;
- Providing legal advice on how to structure your project (including financing terms);
- Advising potential investors on how to structure their projects;
Requirements of investment Agreement:
The following are typical requirements of an foreign investment agreement:
The tax and legal system must be transparent and predictable. The investment must be protected by laws that safeguard foreign investors’ property rights, including intellectual property rights. Foreign investors may not be subject to discriminatory or arbitrary)’ treatment.
There must be equal treatment for local and foreign investors with respect to the application of laws and regulations (including those relating to customs duties, foreign exchange controls, and other barriers to trade).
There should be no restrictions on the repatriation of profits, capital, and other earnings generated from the investment. The investor should also have the freedom to transfer funds for reinvestment or withdrawal from the county as well as freedom from any restrictions imposed by the host government on remitting profits or dividends paid out by a locally incorporated company in which it has invested (so-called “exit taxes”).
Documents are required for the investment agreement:
- Power of Attorney
- Certificate of Incorporation / Memorandum and Articles of Association / Memorandum and Articles of Association (in case of the private limited company)
- Certificate from Registrar of Companies
- Certificate from Commercial Tax Office / Sales Tax Registration Number / Service Tax Registration Number / VAT Number issued by the State Government authority concerned
- Extracts from the Register of Members
- Board Resolution authorizing the execution of the Investment Agreement and its annexures including any waiver or modification with respect to any pre-existing condition or restriction on business activity in dubai/its territory or relating to the conduct of business after entering into an Investment Agreement (if applicable)
We help our clients to manage their global investments by providing them with a range of services including investment management, tax and accounting, Compliance; and Advisory services.