The Equity Financing Agreement is a crucial document used when a company seeks to raise capital by issuing shares to investors in Canada. It is particularly relevant for private companies conducting financing rounds, from seed stage to later-stage investments. The agreement must comply with Canadian federal and provincial securities laws, including National Instrument 45-106 regarding prospectus exemptions. It contains essential provisions about share subscription, purchase price, representations and warranties, and investor rights. The document is typically used in conjunction with other transaction documents such as shareholders' agreements and disclosure schedules, forming a complete investment package that protects all parties' interests while ensuring regulatory compliance.
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1. Parties: Identification of the company issuing equity and the investor(s)
2. Background: Context of the investment, including company status and purpose of the equity financing
3. Definitions: Key terms used throughout the agreement
4. Subscription for Shares: Details of the equity being issued, including class, number of shares, and price per share
5. Purchase Price and Closing: Payment terms, closing conditions, and closing mechanics
6. Representations and Warranties of the Company: Company's statements about its legal status, financial condition, and business
7. Representations and Warranties of the Investor: Investor's statements about their capacity and authority to invest
8. Covenants: Ongoing obligations of the parties post-closing
9. Rights of Investors: Special rights granted to investors, such as board representation or information rights
10. Transfer Restrictions: Limitations on the transfer of shares
11. Termination: Circumstances under which the agreement can be terminated
12. General Provisions: Standard legal provisions including notices, amendments, governing law, etc.
1. Pre-emptive Rights: Rights of existing shareholders to maintain their ownership percentage in future offerings
2. Tag-Along Rights: Right of minority shareholders to join in the sale of shares by majority shareholders
3. Drag-Along Rights: Right of majority shareholders to force minority shareholders to join in a sale
4. Anti-dilution Protection: Provisions protecting investors from dilution in future down rounds
5. Registration Rights: Rights related to future public offerings (more common in agreements governed by US law)
6. Dividend Rights: Special provisions regarding payment of dividends
7. Conversion Rights: Terms for converting preferred shares to common shares, if applicable
1. Disclosure Schedule: Exceptions to company representations and warranties
2. Capitalization Table: Details of company's share capital structure pre and post-investment
3. Form of Shareholders' Agreement: Agreement governing relationship between shareholders post-investment
4. Corporate Resolutions: Board and shareholder resolutions approving the transaction
5. Investor Rights Agreement: Detailed terms of special rights granted to investors
6. Articles of Amendment: If new share classes are being created
7. Legal Opinion: Form of legal opinion to be delivered at closing
8. Compliance Certificate: Certificate confirming accuracy of representations at closing
Relevant legal definitions
Affiliate
Agreement
Articles
Board
Business Day
Class [X] Shares
Closing
Closing Date
Company
Completion
Confidential Information
Convertible Securities
Directors
Disclosure Schedule
Effective Date
Encumbrance
Financial Statements
Fully Diluted Basis
GAAP
Governmental Authority
Intellectual Property
Investment Amount
Investor(s)
Issue Price
Material Adverse Effect
Material Agreement
Material Contract
New Securities
Ordinary Course of Business
Ordinary Shares
Party/Parties
Person
Pre-emptive Right
Preferred Shares
Purchase Price
Qualifying IPO
Related Party
Representatives
Securities
Securities Laws
Share Capital
Shareholder
Shareholders' Agreement
Subscription Shares
Subsidiary
Transaction Documents
Warrants
Agreement
Articles
Board
Business Day
Class [X] Shares
Closing
Closing Date
Company
Completion
Confidential Information
Convertible Securities
Directors
Disclosure Schedule
Effective Date
Encumbrance
Financial Statements
Fully Diluted Basis
GAAP
Governmental Authority
Intellectual Property
Investment Amount
Investor(s)
Issue Price
Material Adverse Effect
Material Agreement
Material Contract
New Securities
Ordinary Course of Business
Ordinary Shares
Party/Parties
Person
Pre-emptive Right
Preferred Shares
Purchase Price
Qualifying IPO
Related Party
Representatives
Securities
Securities Laws
Share Capital
Shareholder
Shareholders' Agreement
Subscription Shares
Subsidiary
Transaction Documents
Warrants
Clauses
Subscription for Shares
Purchase Price and Payment
Closing Conditions
Representations and Warranties
Confidentiality
Share Transfer Restrictions
Pre-emptive Rights
Tag-Along Rights
Drag-Along Rights
Board Representation
Information Rights
Anti-dilution Protection
Protective Provisions
Registration Rights
Non-competition
Non-solicitation
Indemnification
Termination
Assignment
Notices
Governing Law
Dispute Resolution
Amendment
Waiver
Severability
Entire Agreement
Further Assurance
Costs
Force Majeure
Counterparts
Purchase Price and Payment
Closing Conditions
Representations and Warranties
Confidentiality
Share Transfer Restrictions
Pre-emptive Rights
Tag-Along Rights
Drag-Along Rights
Board Representation
Information Rights
Anti-dilution Protection
Protective Provisions
Registration Rights
Non-competition
Non-solicitation
Indemnification
Termination
Assignment
Notices
Governing Law
Dispute Resolution
Amendment
Waiver
Severability
Entire Agreement
Further Assurance
Costs
Force Majeure
Counterparts
Relevant Industries
Technology
Life Sciences
Clean Technology
Financial Services
Manufacturing
Real Estate
Consumer Goods
Healthcare
Energy
Mining
Agriculture
Media and Entertainment
Software
E-commerce
Telecommunications
Relevant Teams
Legal
Finance
Corporate Development
Compliance
Executive Leadership
Investment
Board of Directors
Corporate Secretariat
Risk Management
Treasury
Relevant Roles
Chief Executive Officer
Chief Financial Officer
General Counsel
Corporate Secretary
Investment Manager
Private Equity Manager
Venture Capital Partner
Corporate Lawyer
Investment Banker
Business Development Director
Finance Director
Compliance Officer
Board Member
Managing Director
Fund Manager
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