---

name: prompt-pack-disclosure-letter
description: Use when drafting a disclosure letter from a seller to a buyer in connection with a share purchase agreement (SPA) or asset purchase agreement. Covers general and specific disclosures against representations and warranties, material contracts schedules, and exceptions to warranty coverage. Relevant for corporate M&A transactions across MENA (UAE, KSA, DIFC, ADGM, LB, EG), UK, EU, and other common-law or civil-law jurisdictions. Trigger when a user needs to prepare the disclosure bundle that accompanies a signed acquisition agreement.
license: MIT
metadata:
id: prompt-pack.disclosure-letter
category: prompt-pack
practice_area: corporate-m-a
jurisdictions: [UAE, DIFC, ADGM, KSA, LB, EG, UK, EU]
priority: P2
intent: [drafting, disclosure-letter, m-and-a, warranties, representations]
related:
- prompt-pack-due-diligence-report
- prompt-pack-due-diligence-request-list
- prompt-pack-escrow-agreement
- prompt-pack-investment-agreement-venture-capital
source: Louis — HAQQ Legal AI (github.com/sboghossian/mini-claude-for-legal)
version: "1.0"

Disclosure Letter

When to use this

Use this skill when the seller side of an M&A transaction needs to prepare the disclosure letter that qualifies the representations and warranties given in a share purchase agreement (SPA) or asset purchase agreement (APA). The disclosure letter is the seller's primary mechanism to carve out known facts from warranty liability; getting it right is as commercially critical as negotiating the warranties themselves.

Typical triggers:

• SPA or APA has been negotiated and the parties are moving to signing/closing
• Seller's counsel needs to prepare or review the disclosure bundle
• Buyer's counsel needs to evaluate adequacy of disclosures for indemnity purposes
• Virtual data room (VDR) contents need to be incorporated by reference

Required inputs

Input	Why it matters	Default if omitted
Seller name and jurisdiction of incorporation	Determines governing-law baseline and disclosure formalities	Ask before proceeding
Buyer name	Addressee of the letter	Ask before proceeding
SPA/APA title and date	Identifies which agreement the disclosures qualify	Ask before proceeding
Governing law of SPA	Determines enforceability of "fair disclosure" vs. "specific disclosure" standard	Ask; note jurisdiction implications below
List of known issues to disclose	The commercial substance of the letter	Ask in detail; this is the whole point
VDR or document index	General disclosures often incorporate all VDR materials by reference	Optional; include if available

Optional inputs

• Escrow / indemnity cap amounts (relevant context for materiality thresholds)
• List of material contracts requiring specific disclosure
• Details of pending litigation, regulatory investigations, or tax exposures
• Real property irregularities or title issues
• Employee matters (key-person risk, disputes, benefit arrears)
• IP ownership gaps or third-party claims
• Environmental or regulatory non-compliances

Document structure

A standard disclosure letter has the following sections:

1. Parties and recitals — Seller(s) as disclosing party, Buyer as addressee, reference to the SPA, date of the letter (typically same day as or just before signing).

2. Definitions — Import key terms from the SPA (Warranties, W&I, Disclosed, Data Room, etc.). Define "Fairly Disclosed" with precision — this standard (knowledge + sufficient detail for a buyer to assess impact) is heavily negotiated.

3. General disclosures — Blanket incorporations by reference:

   • All documents in the VDR (list the data room index as a schedule)
   • Public registries (commercial register, land registry, court filings)
   • Searches conducted prior to signing
   • Matters of public record in the jurisdiction

4. Specific disclosures — Organized warranty by warranty, corresponding to the warranty schedule in the SPA:

   • Corporate existence and authority
   • Capitalization and share title
   • Financial statements and accounts
   • Material contracts — list each, attach copies or VDR references
   • Litigation and disputes — identify each proceeding and status
   • Regulatory and licenses
   • Intellectual property
   • Real estate and leases
   • Tax (underpaid taxes, open assessments, transfer-pricing exposure)
   • Employment and benefits (pending claims, arrears, key-person departures)
   • IT / cybersecurity incidents
   • Environmental

5. Schedules — Attach or incorporate:

   • Disclosure index (if VDR-based)
   • Material contracts list
   • Litigation schedule
   • Properties schedule

6. Signature block — All sellers; authorized signatories; date.

Jurisdictional notes

Jurisdiction	Key disclosure standard	Specific traps
DIFC / ADGM (common law)	"Fairly disclosed" — English-style standard; buyer gets benefit of the doubt if detail insufficient	W&I insurance is common; insurers will scrutinize the letter closely
UAE onshore / KSA (civil law)	Warranty-driven disclosure less developed; Commercial Companies Law and SPA govern; standard is closer to "known facts"	Notarization (tawtheeq) may be required for transfer of shares in LLCs; regulatory approvals (FDI, sector-specific) can delay closing
Lebanon	Civil Code governs; disclosure letter less formalized; often replaced by reps + indemnities with specific schedules	Enforcement of indemnities against Lebanese sellers cross-border is challenging; advise client to negotiate escrow
Egypt	Companies Law and Capital Market Authority rules for listed targets; disclosure to EGX required	Foreign ownership caps in certain sectors; Central Bank approval for financial-sector targets
UK (common law)	"Fair disclosure with sufficient detail" — the gold standard; Infiniteland v Artisan line of cases	Buyer's knowledge imputed from disclosed documents; VDR references widely accepted
France / civil-law EU	Déclarations et garanties (D&G) schedule attached to the SPA; disclosure less formalized; misrepresentation rules under Civil Code apply	Penalty clauses unenforceable unless specific statutory authority; liquidated damages capped

Drafting standards

• Write the specific disclosures in plain, declarative prose: "The Seller discloses that the lease for the Dubai Marina office (copy at Tab 12 of the Data Room) contains a change-of-control clause that requires landlord consent to the proposed transaction."
• Do not use vague language like "various issues with" or "potential concerns" — disclosure must be specific enough that the buyer can assess the risk.
• Each specific disclosure should: (a) identify the warranty being qualified, (b) describe the fact or circumstance, and (c) reference the document in the VDR or append it.
• General disclosures should never substitute for specific disclosures where the seller has actual knowledge of a warranty breach.
• Avoid over-disclosure (disclosing irrelevant matters) — it can waive privilege and weaken negotiating position on materiality thresholds.

Common mistakes

• VDR dump as general disclosure: Blanket "everything in the VDR is disclosed" without an organized index is increasingly rejected by buyers and W&I insurers. The index must be organized and complete.
• Circular disclosures: "We disclose that the warranties may not be accurate" — not effective; courts disregard.
• Missing material contracts: Contracts with change-of-control clauses must be specifically disclosed or buyer can terminate.
• Ignoring civil-law formalities: In UAE onshore LLC deals, the SPA and its schedules may need notarization; the disclosure letter as a standalone document may need separate authentication.
• Timing mismatch: The letter must be dated as of signing; post-signing updates require a supplemental disclosure letter and buyer's written agreement to accept.
• Conflating disclosure with indemnity: Disclosure only limits warranty claims; it does not extinguish indemnity claims for specific known liabilities (tax, litigation) which need separate indemnity provisions in the SPA.

Related skills

• [[prompt-pack-due-diligence-report]]
• [[prompt-pack-due-diligence-request-list]]
• [[prompt-pack-escrow-agreement]]
• [[prompt-pack-investment-agreement-venture-capital]]