OQAL Note
Sharia Compliant OQAL Note The Islamic
It is an innovative note that can revolutionize early-stage investments in the Middle East and North Africa region
The OQAL Note is the first standardized Sharia-compliant financing mechanism modeled on start-up funding instruments, such as the 500 Startups KISS and YCombinator SAFE
The initial investment is structured as a debt before being converted into equity at a future point
The three main advantages of the note can be summarized as
Its compatibility with Islamic Shari’ah principles –
Its availability in both Arabic and English languages –
Its conformity under both the Saudi and English legislative systems –
This Note offers investors and start-ups alike a genuine solution to streamline and simplify financing rounds while transacting on a compliant basis. The OQAL Note is a unique solution where the financing will be converted into future equity (similar to existing convertible instruments such as the SAFE or a KISS), but underpinned by first-of-a-kind, Shariah-compliant standardized documentation
What is
OQAL Notes
Convertible notes and agreements for future equity (e.g. KISS, SAFE, etc.) are fundraising and investment instruments commonly used in early-stage investments into startups. They are legal documents issued by the start-ups and signed by the investor(s) pursuant to which the investor will provide financing in exchange for the promise to receive shares in the start-up in the future, once the start-up reaches or satisfies specific agreed-upon stage or terms
The OQAL Note more closely follows the form of a KISS (a form of convertible note prepared by 500 Startups). Certain structural, legal and commercial changes were implemented in order for the OQAL Note to be compatible with Saudi Arabian legal and regulatory framework and Islamic Sharia
How is OQAL Note structured to be Sharia Compliant?
:The note is structured to have two main parts
First
Qard Hassan
Qard Hassan is a non-interest bearing note agreement. The form of the Qard Hassan derived from the commonly-adopted KISS to provide familiarity to investors, founders and start-ups
Secondly
Promise to Sell Shares
A standardized document that includes the “conversion” mechanics to ensure that the investor has the right to convert the qard into shares upon the occurrence of future events
Supporting partners
