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Case Study
Drafting an Investment Agreement for the Acquisition of 130 Million Shares in a Saudi Listed Bank
Dispute Value
130 Million Shares
Investment transactions involving the acquisition of a significant number of shares in a listed company or financial institution require a carefully structured legal and contractual framework governing the acquisition process, completion requirements, representations and warranties, transfer formalities, and the parties’ rights and obligations.
In this matter, Atyar Advocates and Legal Consultants advised a private client on an investment involving the proposed acquisition of 130 million shares in a Saudi listed bank through a transaction based in Riyadh.
The scope of work included providing legal advice, preparing a comprehensive legal study, and drafting the investment agreement covering the acquisition and transfer of the shares, conditions precedent, representations and warranties, and the consequences of delay or non-performance.
All services were provided under strict confidentiality regarding the client’s identity, the counterparties, and the financial and commercial terms of the transaction.
Quick Matter Overview
Number of Shares
130,000,000 shares
Transaction Location
Riyadh, Saudi Arabia
Nature of the Investment
Acquisition of shares in a Saudi listed bank
Scope of Legal Services
Legal advice, comprehensive legal study, and drafting of the investment agreement
Background of the Investment Transaction
The matter concerned an investment transaction involving the proposed acquisition of 130 million shares in a Saudi listed bank. The transaction required the contractual relationship between the parties to be clearly regulated, together with the procedures for completion and transfer of the rights attached to the shares.
Given the substantial number of shares, the nature of the banking sector, and the potential regulatory, disclosure, and procedural requirements associated with the transaction, the matter required a specialised legal assessment of the investment structure, the parties’ respective legal positions, their financial obligations, and the risks associated with implementation.
The client engaged Atyar Advocates and Legal Consultants to provide legal advice, analyse the proposed transaction and available documents, identify the protections required for the client’s legal position, and prepare an investment agreement providing a clear framework for the acquisition.
Shares Included
130 million shares
Subject of the Investment
Acquisition of shares in a Saudi listed bank
Transaction Location
Riyadh, Saudi Arabia
Applicable Legal Framework
Saudi Commercial & Investment Laws
Nature of the Investment Transaction
The transaction concerned the acquisition of a substantial number of shares in a Saudi listed bank and required detailed regulation of the parties’ rights and obligations from the negotiation stage through completion and transfer.
The principal legal matters associated with the transaction included
- Identifying the parties and their legal capacities.
- Confirming the parties’ authority to enter into the transaction
- Defining the number of shares included in the investment
- Identifying the class of shares and the rights attached to them.
- Determining the purchase consideration and its calculation.
- Regulating the payment method and payment dates.
- Defining the conditions precedent to completion
- Regulating the procedure for acquiring and transferring the shares
- Establishing the proposed completion date.
- Drafting representations and warranties
- Regulating responsibility for the accuracy of information provided.
- Addressing dividends and distributions attached to the shares
- Regulating pre-completion and post-completion obligations.
- Addressing delay or failure to perform.
- Defining events of default, rescission, and termination
- Regulating liability and compensation
- Protecting confidential information
- Establishing a clear dispute resolution mechanism
Nature of the Share Investment Agreement
A share investment or share purchase agreement provides the legal framework governing the transfer of an agreed number of shares from one party to another.
It defines the purchase consideration, conditions, warranties, completion procedure, and the contractual consequences of non-performance.This type of agreement requires careful regulation of the following matters:
Parties to the Transaction
Identifying the parties, their legal capacities, and their authority to execute the agreement and perform the obligations arising from it.
Shares Included in the Investment
Defining the number and class of shares, the rights and privileges attached to them, and any restrictions affecting their transferability.
Purchase Consideration
Defining the share price or the method for calculating the consideration, payment dates, payment method, applicable currency, and the consequences of late payment.
Conditions Precedent
Identifying the documents, approvals, and procedures that must be completed before the transaction may proceed to completion.
Share Transfer Procedure
Regulating the steps, documentation, timetable, and applicable mechanism for transferring the shares and recording the transfer of the associated rights.
Representations and Warranties
Preparing contractual assurances concerning ownership, authority to transfer, accuracy of information, and the absence of restrictions preventing completion.
Rights Attached to the Shares
Defining the treatment of dividends, distributions, voting rights, and other benefits or obligations associated with the shares.
Pre-Completion Obligations
Regulating the parties’ conduct between execution and completion and preventing actions capable of adversely affecting the transaction or the other party’s rights.
Post-Completion Obligations
Identifying the documents, actions, and procedures required after the shares have been transferred.
Key Legal Challenges
Substantial Number of Shares
The transaction involved the proposed acquisition of 130 million shares, requiring clear regulation of the acquisition structure, completion timetable, and transfer of associated rights.
Banking and Investment Nature of the Transaction
The proposed acquisition concerned shares in a Saudi listed bank, requiring consideration of the applicable banking, investment, and regulatory requirements, including any necessary approvals or disclosures.
Verification of Ownership and Transferability
The agreement required representations confirming ownership, authority to transfer the shares, and the absence of restrictions, together with liability for any inaccurate or incomplete information.
Determining the Legal Structure of the Acquisition
The transaction required defining the acquisition structure, whether by direct purchase or staged completion, as it affected payment, transfer of rights, and liability.
Regulating the Purchase Consideration
The agreement required clear provisions on the purchase price, payment terms, and the consequences of late or failed payment on the transaction.
Drafting the Conditions Precedent
The agreement identified the required pre-completion documents and approvals, allocated responsibility for each condition, and defined the consequences of non-compliance.
Regulating the Share Transfer
The agreement required a clear transfer mechanism, completion procedures, and the point at which ownership, benefits, and risks would pass.
Treatment of Dividends and Distributions
The transaction defined entitlement to dividends or distributions before completion, reducing the risk of disputes over financial rights.
Representations and Warranties
The transaction required representations and warranties regarding the parties’ authority, share ownership, transferability, and accuracy of information, together with the consequences of breach.
Our Legal Strategy
The legal team at Atyar Advocates and Legal Consultants adopted a specialised approach reflecting the scale of the transaction and its banking and investment context.
Identifying the Client’s Investment Objectives
The engagement began with an assessment of the client’s objectives in acquiring the shares, the proposed size of the investment, the anticipated holding period, and the intended commercial outcome. This enabled the firm to determine an appropriate contractual structure and the protections required for the client’s legal position
Reviewing the Share Information
The available information and documents concerning the number and class of shares, the associated rights, and any restrictions affecting transferability were reviewed. The firm also identified the matters requiring confirmation through contractual representations and warranties.
Analysing the Transaction Structure
The available structuring options were assessed, including completion in a single transaction or through a series of connected stages. The selected structure was designed to clarify the relationship between payment, transfer of shares, and satisfaction of the conditions preceden
Dividing the Transaction into Clear Stages
The development works were defined clearly, and responsibility for planning, design, permits, implementation, supervision, and handover was allocated between the relevant parties. The agreement also regulated approval of works and variations to the project scope.
Structuring the Purchase Consideration and Payment
Clear provisions were prepared concerning the purchase consideration, calculation method, payment dates, and documentary evidence of payment. The agreement also addressed the consequences of late or failed payment and the relationship between payment and transfer of the shares.
Defining the Conditions Precedent
A clear list of approvals, documents, and procedural requirements to be satisfied before completion was prepared. Responsibility for each condition, the applicable deadline, and the consequences of non-satisfaction were also defined.
Drafting Representations and Warranties
Representations and warranties were prepared concerning the parties’ legal capacities, authority to contract, ownership and transferability of the shares, and accuracy of the information provided. The agreement also addressed liability and compensation for breach of any representation or warranty.
Regulating the Transfer of Shares and Associated Rights
The completion date, transfer mechanism, required documents, and the point at which rights, benefits, and risks would pass were defined. The treatment of voting rights, dividends, and distributions was also addressed.
Protecting Confidential Information
The agreement included provisions protecting financial, commercial, and investment information and restricting its use or disclosure outside the purposes of the transaction. Limited exceptions were included for disclosures required by competent authorities or made to authorised professional advisers.
Legal Services Provided
Legal Advice
Providing advice concerning the investment structure, acquisition mechanism, parties’ rights and obligations, legal and regulatory risks, and the safeguards required to protect the client’s position.
Comprehensive Legal Study
Preparing a specialised assessment of the transaction, the number of shares, acquisition structure, conditions precedent, principal risks, and the available legal options.
Drafting the Investment Agreement
Preparing a comprehensive agreement regulating the acquisition of 130 million shares, the purchase consideration, payment, completion, transfer, representations and warranties, default, termination, and dispute resolution.
Legal Insight
A share purchase agreement should do more than identify the number of shares and the purchase consideration. It should regulate every stage of the transaction from negotiation through completion and transfer of rights.
Careful legal drafting becomes particularly important where the investment concerns a substantial number of shares in a listed entity. The agreement should clearly define the conditions precedent, regulatory approvals, representations and warranties, payment procedure, point of transfer of rights and risks, and liability for inaccurate information.
An early legal study assists in identifying risk, selecting the appropriate transaction structure, establishing safeguards for the client, and preparing an agreement capable of addressing disputes concerning payment, completion, transfer, or liability for breach.
Legal Value Delivered to the Client
- Identified an appropriate legal structure for the transaction.
- Regulated the acquisition of 130 million shares
- Reviewed the available information and documents concerning the shares
- Defined the parties’ respective rights and obligations
- Structured the purchase consideration and payment mechanism.
- Defined the conditions precedent to completion
- Defined the point at which rights and risks would pass.
- Drafted the representations and warranties
- Regulated dividends and distributions
- Protected confidential information
- Allocated transaction risks and liabilities.
- Addressed delay and failure to perform.
- Regulated liability and compensation.
- Defined default, rescission, and termination rights.
- Established a clear dispute resolution mechanism.
- Reduced ambiguity and inconsistency between contractual provisions.
- Provided a legal and interpretative reference for the parties.
- Protected the confidentiality of the client and the transaction.
Scope of Legal Work
Atyar Advocates and Legal Consultants provided legal advice, prepared a comprehensive legal study, and drafted an investment agreement for a private client in connection with the proposed acquisition of 130 million shares in a Saudi listed bank through a transaction based in Riyadh.
The scope of work included analysing the transaction structure, reviewing the available information concerning the shares, identifying the conditions precedent, regulating the purchase consideration, payment, and transfer, and drafting the representations and warranties, confidentiality obligations, liability provisions, default remedies, and termination rights.
The firm also prepared a comprehensive investment agreement governing the relationship between the parties without disclosing the client’s identity, the counterparties, the financial value of the transaction, or its confidential commercial terms.
Legal Team Responsible for This Matter
Prof. Dr. Turki Al-Tayyar
Founder and Managing Partner, and an expert in the judiciary, legal practice, arbitration, and university education, with more than 25 years of combined experience.
Mr. Salem Saad Al-Dosari
Partner specialising in administrative contracts, investment, and litigation, with extensive experience in administrative and commercial cases.
Practice Areas Related to This Matter
- Real Estate Dispute Resolution
- Property Ownership Claims
- Litigation Before the General Courts
- Investment Disputes
- Government Contracts and Administrative Matters
- Compensation Claims
Need Assistance Drafting or Reviewing a Share Purchase Agreement?
If you are preparing to acquire shares or ownership interests, undertake an investment transaction, or complete an acquisition, Atyar Advocates and Legal Consultants provides legal advice, comprehensive studies, drafting, review, amendment, documentation, representation, and litigation services throughout Saudi Arabia.
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- 00966555398969
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