Debenture Subscription Agreement for Canada

Debenture Subscription Agreement Template for Canada

A Canadian law-governed Debenture Subscription Agreement is a comprehensive legal document that establishes the terms and conditions under which an investor subscribes to debentures issued by a company. The agreement details the subscription price, interest rates, repayment terms, and any security or conversion rights associated with the debentures. It incorporates provisions compliant with Canadian federal and provincial securities laws, including necessary regulatory requirements and disclosures. The document typically includes representations and warranties from both parties, covenants of the issuer, events of default, and remedies available to the debenture holders.

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What is a Debenture Subscription Agreement?

The Debenture Subscription Agreement is utilized when a company seeks to raise debt financing through the issuance of debentures in Canada. It serves as the primary document governing the relationship between the issuing company and the debenture subscribers, establishing their respective rights and obligations. The agreement must comply with Canadian securities regulations, both federal and provincial, particularly regarding disclosure requirements and investor protection measures. It typically includes detailed terms about the debt instrument, including interest rates, maturity dates, security (if any), conversion rights (if applicable), and events of default. This document is crucial for both private and public offerings of debentures and must be carefully structured to ensure compliance with applicable securities laws while protecting the interests of all parties involved.

What sections should be included in a Debenture Subscription Agreement?

1. Parties: Identifies the issuer of the debenture and the subscriber(s)

2. Background: Explains the context of the debenture issuance and the company's authority to issue the debentures

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Subscription and Issue: Details the basic terms of the subscription, including amount, price, and class of debentures

5. Payment Terms: Specifies the payment schedule, interest rates, and calculation methods

6. Closing: Sets out the closing mechanics, conditions precedent, and timing

7. Representations and Warranties of the Issuer: Contains issuer's statements about its legal status, authority, and financial condition

8. Representations and Warranties of the Subscriber: Contains subscriber's statements about their authority and eligibility to invest

9. Covenants: Details ongoing obligations of the issuer, including financial covenants and reporting requirements

10. Events of Default: Lists circumstances that constitute default and consequences thereof

11. Remedies: Outlines available remedies in case of default or breach

12. Notices: Specifies how formal communications between parties should be made

13. General Provisions: Contains standard boilerplate clauses including governing law, amendments, and assignment

What sections are optional to include in a Debenture Subscription Agreement?

1. Security: Include when the debentures are secured by specific assets or guarantees

2. Conversion Rights: Include for convertible debentures, detailing conversion terms and procedures

3. Registration Rights: Include when subscribers are granted rights to require registration of securities

4. Subordination: Include when the debentures are subordinated to other debt

5. Tax Matters: Include when specific tax considerations need to be addressed

6. Board Observer Rights: Include when subscribers are granted rights to observe board meetings

7. Information Rights: Include when subscribers are granted specific information access rights beyond standard covenants

8. Pre-emptive Rights: Include when subscribers are granted rights to participate in future offerings

What schedules should be included in a Debenture Subscription Agreement?

1. Form of Debenture Certificate: The form of the physical or electronic debenture certificate to be issued

2. Subscription Details: Details of the subscription amount, subscriber information, and payment instructions

3. Description of Security: If secured, detailed description of the security package and secured assets

4. Financial Covenants: Detailed financial ratios and calculations required to be maintained

5. Conversion Mechanics: For convertible debentures, detailed procedures and calculations for conversion

6. Required Regulatory Approvals: List of required regulatory approvals and status

7. Disclosure Schedule: Exceptions and disclosures to representations and warranties

8. Form of Compliance Certificate: Template for periodic compliance certification by the issuer

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Canada

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Real Estate

Infrastructure

Mining and Natural Resources

Technology

Manufacturing

Energy

Healthcare

Telecommunications

Commercial Real Estate

Industrial

Clean Technology

Biotechnology

Relevant Teams

Legal

Finance

Treasury

Corporate Secretarial

Compliance

Risk Management

Corporate Development

Executive Leadership

Investment

Corporate Finance

Board of Directors

Relevant Roles

Chief Financial Officer

Chief Executive Officer

Corporate Secretary

General Counsel

Finance Director

Investment Manager

Treasury Manager

Corporate Finance Manager

Legal Counsel

Compliance Officer

Investment Banker

Financial Controller

Risk Manager

Board Director

Company Secretary

Securities Lawyer

Industries
Teams

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