Finder's Fee Agreement For Raising Capital Template for Canada
Generate a bespoke document
What is a Finder's Fee Agreement For Raising Capital?
The Finder's Fee Agreement For Raising Capital is essential for Canadian businesses seeking to formalize arrangements with intermediaries who help secure investment capital. This document is typically used when a company requires external funding and wishes to engage someone to facilitate introductions to potential investors. The agreement must carefully navigate Canadian securities regulations, including provincial Securities Acts and National Instruments 31-103 and 33-105, which govern registration requirements and compensation arrangements in securities transactions. It defines the scope of permitted activities to ensure compliance with securities laws, establishes clear compensation structures, and includes necessary regulatory disclosures. The document is particularly important for protecting both parties' interests and ensuring transparency in capital raising activities while maintaining compliance with Canadian legal requirements.
Trusted by high-performance teams
About the Finder's Fee Agreement For Raising Capital
When your company needs to raise capital and you're considering engaging an intermediary to facilitate investor introductions, a Finder's Fee Agreement For Raising Capital becomes essential. This legal document establishes the terms under which you compensate someone for successfully connecting you with potential investors, while ensuring compliance with Canada's complex securities regulations.
When do you need this document?
You'll need this agreement when engaging third parties to help locate investors for your business. This includes situations where you're working with business brokers, investment consultants, or industry contacts who have access to qualified investors. The document is particularly crucial when the finder will receive compensation based on the amount of capital raised, as this triggers specific regulatory requirements under Canadian securities law. You'll also need it when the finder will have any ongoing relationship with potential investors or when they'll be presenting investment materials on your behalf.
Key legal considerations
The agreement must carefully define the scope of permitted activities to ensure the finder doesn't engage in activities requiring securities registration. Key clauses should specify that the finder cannot provide investment advice, negotiate terms, or handle investor funds directly. Compensation structures must be clearly outlined, including whether fees are flat-rate, percentage-based, or milestone-driven. The document should include comprehensive indemnification clauses protecting both parties and establish clear termination procedures. Confidentiality provisions are essential given the sensitive nature of financial information that may be shared. Additionally, the agreement must address potential conflicts of interest and require disclosure of any relationships the finder may have with potential investors.
Legal requirements in Canada
Canadian securities law imposes strict requirements on finder's fee arrangements through provincial Securities Acts and National Instruments. Under National Instrument 31-103, finders must be careful not to engage in activities that would require registration as dealers or advisers. The agreement must ensure the finder's role is limited to introductions and cannot include investment advice or securities trading activities. Provincial securities regulators may require specific disclosures about compensation arrangements to potential investors. National Instrument 33-105 mandates disclosure of any conflicts of interest or compensation arrangements that could influence the transaction. The Criminal Code of Canada's Section 347 provisions on criminal interest rates may apply if fee structures could be characterized as loans or advances. Compliance with these regulations is mandatory, and violations can result in significant penalties for both parties.
GOVERNING LAW
Applicable law
This Finder's Fee Agreement For Raising Capital is drafted to comply with Canada law. Key legislation includes:
National Instrument 31-103: Registration Requirements, Exemptions and Ongoing Registrant Obligations - Determines when registration is required for persons engaged in the business of trading securities or acting as an intermediary.
National Instrument 33-105: Underwriting Conflicts - Governs disclosure requirements for compensation arrangements and potential conflicts of interest in securities transactions.
Criminal Code of Canada (Section 347): Regulates criminal interest rates and could apply to certain fee arrangements if they could be characterized as interest charges.
Income Tax Act: Governs the tax treatment of finder's fees, including withholding requirements and reporting obligations for both parties.
Proceeds of Crime (Money Laundering) and Terrorist Financing Act: May apply if the finder's activities involve receiving or directing funds, requiring compliance with anti-money laundering regulations.
Provincial Business Corporations Act: Governs corporate authority to enter into agreements and pay finder's fees, as well as directors' duties in approving such arrangements.
Competition Act: May be relevant if the finder's fee arrangement could be seen as affecting competition or involving collusion in market activities.
Explore 208,390+ legal templates
Explore 208,390+ legal templates
Genie's Security Promise
Genie is the safest place to draft. Here's how we prioritise your privacy and security.
Your data is private:
We do not train on your data; Genie's AI improves independently
All data stored on Genie is private to your organisation
Your documents are protected:
Your documents are protected by ultra-secure 256-bit encryption
We are ISO27001 certified, so your data is secure
Organizational security:
You retain IP ownership of your documents and their information
You have full control over your data and who gets to see it