The Preferred Equity Agreement is a crucial document used in Australian corporate financing transactions where companies seek to raise capital while offering investors preferential rights over ordinary shareholders. This agreement is commonly utilized in growth-stage companies, private equity investments, and venture capital transactions where investors require additional protection and privileges beyond those offered to common shareholders. The document must comply with Australian corporate law, particularly the Corporations Act 2001 (Cth), and includes detailed provisions on economic rights, governance, exit mechanisms, and anti-dilution protection. It's essential for structuring investments that balance the company's need for growth capital with investors' requirements for downside protection and upside participation.
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1. Parties: Identification of the issuing company and the preferred equity investor(s)
2. Background: Context of the preferred equity investment, including company status and purpose of the investment
3. Definitions: Defined terms used throughout the agreement
4. Subscription and Issue: Details of the preferred equity subscription, including amount, price, and mechanics of issue
5. Economic Rights: Dividend rights, liquidation preferences, participation rights, and other economic entitlements
6. Voting Rights: Voting powers of preferred equity holders and any special voting rights
7. Protective Provisions: Matters requiring preferred equity holder consent
8. Anti-dilution Protection: Provisions protecting preferred equity holders from dilution in future rounds
9. Information Rights: Rights to receive financial and other company information
10. Transfer Restrictions: Limitations on transfer of preferred equity interests
11. Conversion Rights: Terms and conditions for converting preferred equity to ordinary shares
12. Exit Rights: Rights related to company sale, IPO, or other exit events
13. Default: Events of default and consequences
14. Representations and Warranties: Company and investor representations and warranties
15. General Provisions: Standard boilerplate clauses including notices, amendments, governing law
1. Board Rights: Rights to appoint directors or observers to the board - include when investors require board representation
2. Pre-emptive Rights: Rights to participate in future funding rounds - include for larger investments or strategic investors
3. Tag-Along Rights: Rights to participate in sales by other shareholders - include for minority investor protection
4. Drag-Along Rights: Rights to force other shareholders to join in a sale - include when majority holders want exit flexibility
5. Registration Rights: Rights related to registering shares for public trading - include if IPO is a likely exit path
6. Environmental, Social and Governance (ESG): ESG requirements and reporting - include for investors with ESG mandates
7. Management Rights: Special rights regarding company management - include for active investors
8. Co-Sale Rights: Rights to sell alongside other shareholders - include for additional exit protection
1. Subscription Details: Detailed terms of the preferred equity subscription including price calculation
2. Capitalization Table: Current and post-investment capital structure of the company
3. Form of Shareholders Resolution: Required corporate approvals for the preferred equity issuance
4. Certificate of Preferred Equity Terms: Detailed terms and conditions of the preferred equity
5. Investor Questionnaire: Required investor information and qualifications
6. Form of Legal Opinions: Required legal opinions regarding the investment
7. Financial Statements: Recent financial statements of the company
8. Business Plan: Company's business plan and projections
Relevant legal definitions
Accrued Dividends
Anti-dilution Adjustment
Applicable Law
ASIC
ASX
Authorised Representative
Board
Business Day
Change of Control
Company Constitution
Completion
Completion Date
Confidential Information
Conversion Price
Conversion Rights
Corporations Act
Deemed Liquidation Event
Default Event
Dilutive Issue
Directors
Dividend Rate
Encumbrance
Exit Event
Fair Market Value
Financial Year
Fully Diluted Basis
GST
Holders
Independent Expert
Initial Public Offering
Insolvency Event
Issue Date
Issue Price
Liquidation Event
Liquidation Preference
Material Adverse Change
New Securities
Original Issue Price
Ordinary Shares
Participating Rights
Permitted Transferee
Preferred Dividend
Preferred Equity Interest
Preferred Holders
Pro Rata Share
Qualified IPO
Related Body Corporate
Related Party
Relevant Interest
Security Interest
Series [X] Preferred Equity
Shareholder
Subscription Amount
Substantial Holder
Tag-Along Notice
Tag-Along Right
Tax
Transfer
Valuation Event
Voting Rights
Anti-dilution Adjustment
Applicable Law
ASIC
ASX
Authorised Representative
Board
Business Day
Change of Control
Company Constitution
Completion
Completion Date
Confidential Information
Conversion Price
Conversion Rights
Corporations Act
Deemed Liquidation Event
Default Event
Dilutive Issue
Directors
Dividend Rate
Encumbrance
Exit Event
Fair Market Value
Financial Year
Fully Diluted Basis
GST
Holders
Independent Expert
Initial Public Offering
Insolvency Event
Issue Date
Issue Price
Liquidation Event
Liquidation Preference
Material Adverse Change
New Securities
Original Issue Price
Ordinary Shares
Participating Rights
Permitted Transferee
Preferred Dividend
Preferred Equity Interest
Preferred Holders
Pro Rata Share
Qualified IPO
Related Body Corporate
Related Party
Relevant Interest
Security Interest
Series [X] Preferred Equity
Shareholder
Subscription Amount
Substantial Holder
Tag-Along Notice
Tag-Along Right
Tax
Transfer
Valuation Event
Voting Rights
Clauses
Issue and Subscription
Payment Terms
Dividend Rights
Liquidation Preference
Conversion Rights
Anti-dilution Protection
Voting Rights
Board Representation
Information Rights
Pre-emptive Rights
Tag-Along Rights
Drag-Along Rights
Transfer Restrictions
Exit Rights
IPO Rights
Protective Provisions
Representations and Warranties
Covenants
Events of Default
Remedies
Confidentiality
Notices
Assignment
Amendment and Waiver
Governing Law
Dispute Resolution
Severability
Entire Agreement
Force Majeure
Costs and Expenses
Tax Matters
Regulatory Compliance
Related Party Transactions
Share Certificates
Further Assurance
Payment Terms
Dividend Rights
Liquidation Preference
Conversion Rights
Anti-dilution Protection
Voting Rights
Board Representation
Information Rights
Pre-emptive Rights
Tag-Along Rights
Drag-Along Rights
Transfer Restrictions
Exit Rights
IPO Rights
Protective Provisions
Representations and Warranties
Covenants
Events of Default
Remedies
Confidentiality
Notices
Assignment
Amendment and Waiver
Governing Law
Dispute Resolution
Severability
Entire Agreement
Force Majeure
Costs and Expenses
Tax Matters
Regulatory Compliance
Related Party Transactions
Share Certificates
Further Assurance
Relevant Industries
Private Equity
Venture Capital
Financial Services
Technology
Real Estate
Infrastructure
Healthcare
Manufacturing
Mining and Resources
Renewable Energy
Biotechnology
Telecommunications
Relevant Teams
Legal
Finance
Corporate Development
Investment
Compliance
Risk Management
Board of Directors
Executive Leadership
Treasury
Corporate Secretariat
Relevant Roles
Chief Executive Officer
Chief Financial Officer
General Counsel
Investment Director
Corporate Lawyer
Investment Manager
Financial Controller
Company Secretary
Chief Investment Officer
Director of Corporate Development
Risk Manager
Compliance Officer
Private Equity Associate
Investment Analyst
Board Director
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