Stock Escrow Agreement for Canada

Stock Escrow Agreement Template for Canada

A comprehensive legal agreement governed by Canadian securities law, particularly National Policy 46-201, that establishes the terms and conditions for holding securities in escrow during a specified period. The document outlines the mechanisms for depositing, holding, and releasing securities, typically in the context of initial public offerings or other significant corporate transactions. It includes detailed provisions for the roles and responsibilities of the escrow agent, the rights of security holders during the escrow period, and the specific conditions under which securities can be released or transferred. The agreement ensures compliance with Canadian securities regulations and provides protection for investors while maintaining market stability.

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What is a Stock Escrow Agreement?

The Stock Escrow Agreement is a crucial document in Canadian securities transactions, particularly during initial public offerings (IPOs) or significant corporate reorganizations. This agreement is designed to comply with National Policy 46-201 and other relevant Canadian securities regulations, establishing a framework for the temporary restriction of share trading by company insiders and major shareholders. The document details the appointment of an escrow agent, typically a trust company, who holds the securities during a specified period to ensure market stability and protect investor interests. The agreement includes specific release schedules, voting rights provisions, and transfer restrictions, while also addressing various contingencies such as corporate reorganizations or death of security holders. It's particularly important for companies transitioning from private to public status or undertaking major corporate transactions, as it helps maintain market confidence and ensures compliance with regulatory requirements.

What sections should be included in a Stock Escrow Agreement?

1. Parties: Identifies the key parties: the Company, Shareholders (Security holders), and Escrow Agent

2. Background: Explains the context of the escrow arrangement, including the corporate transaction necessitating the escrow

3. Definitions: Defines key terms used throughout the agreement, including Escrow Securities, Release Conditions, and Escrow Period

4. Deposit of Escrow Securities: Details the process of depositing securities into escrow, including delivery of share certificates

5. Escrow Agent Duties and Responsibilities: Outlines the obligations and authority of the escrow agent in managing the escrowed securities

6. Release of Escrow Securities: Specifies the conditions and timeline for releasing securities from escrow

7. Voting Rights and Dividends: Addresses how voting rights are exercised and dividends are handled during the escrow period

8. Transfer Restrictions: Details restrictions on transferring or encumbering escrowed securities

9. Replacement of Certificates: Procedures for replacing lost or damaged share certificates

10. Escrow Agent Compensation: Terms of payment for the escrow agent's services

11. Termination: Conditions and process for terminating the escrow agreement

12. Notices: Communication requirements and contact details for all parties

13. General Provisions: Standard contract clauses including governing law, amendments, and severability

What sections are optional to include in a Stock Escrow Agreement?

1. Early Release Provisions: Used when allowing for potential early release of securities under specific circumstances

2. Death or Bankruptcy Provisions: Added when specific provisions for handling escrowed securities in case of security holder's death or bankruptcy are needed

3. Foreign Ownership Restrictions: Required when dealing with international shareholders or securities subject to foreign ownership limits

4. Tax Matters: Included when specific tax considerations need to be addressed

5. Corporate Transaction Provisions: Added when the agreement needs to address potential mergers, acquisitions, or other corporate reorganizations

6. Regulatory Compliance: Additional provisions required for specific stock exchange or regulatory requirements

7. Electronic Trading Provisions: Used when securities are held in electronic form through a clearing system

What schedules should be included in a Stock Escrow Agreement?

1. Schedule A - List of Security Holders: Details of all security holders subject to escrow, including names, addresses, and shareholdings

2. Schedule B - Share Certificate Details: List of all share certificates placed in escrow, including certificate numbers and share quantities

3. Schedule C - Release Schedule: Detailed timetable for the release of escrowed securities, including specific dates and percentages

4. Schedule D - Form of Transfer Power: Standard form for transferring securities when permitted

5. Schedule E - Acknowledgment Form: Form for security holders to acknowledge escrow terms and conditions

6. Appendix A - Permitted Transfers: List of circumstances under which transfers of escrowed securities are permitted

7. Appendix B - Release Conditions: Detailed description of conditions that must be met for securities to be released from escrow

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

Technology

Mining and Resources

Healthcare and Biotechnology

Manufacturing

Real Estate

Energy

Telecommunications

Consumer Goods

Professional Services

Relevant Teams

Legal

Corporate Finance

Executive Leadership

Corporate Governance

Compliance

Treasury

Investor Relations

Corporate Development

Board of Directors

Corporate Secretary Office

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

General Counsel

Securities Lawyer

Trust Officer

Compliance Officer

Corporate Finance Director

Investment Banking Director

Board Director

VP of Legal Affairs

VP of Corporate Development

Securities Administrator

Escrow Manager

Corporate Governance Officer

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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