The Standby Equity Purchase Agreement (SEPA) is a strategic financing tool used when companies require flexible access to equity capital without immediate dilution. This Swiss-law governed agreement is particularly valuable for growing companies, listed entities, or businesses with variable capital needs. It establishes a commitment from an investor to purchase newly issued shares over time, typically activated through drawdown notices. The document includes detailed provisions for share pricing, purchase mechanics, regulatory compliance (especially with FINMA requirements), and investor protections. SEPAs are commonly used in Switzerland due to the jurisdiction's robust financial markets and clear regulatory framework, offering companies a reliable method to secure future equity funding while maintaining control over the timing and amount of share issuance.
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1. Parties: Identification of the company issuing shares and the investor making the commitment
2. Background: Context of the agreement and basic commercial understanding
3. Definitions: Key terms used throughout the agreement, including financial and technical definitions
4. Purchase Commitment: Core obligation of the investor to purchase shares, including commitment amount and duration
5. Drawdown Mechanics: Process and procedures for the company to issue drawdown notices
6. Pricing Mechanism: Formula and methodology for determining the purchase price of shares
7. Conditions Precedent: Conditions that must be satisfied before any drawdown can occur
8. Representations and Warranties: Statements of fact by both parties regarding their capacity and authority
9. Company Covenants: Ongoing obligations of the company during the commitment period
10. Investor Covenants: Ongoing obligations of the investor during the commitment period
11. Closing Procedures: Process for completing each individual share purchase
12. Termination: Circumstances under which the agreement can be terminated
13. Confidentiality: Obligations regarding non-disclosure of agreement terms and related information
14. Notices: Process for formal communications between parties
15. Governing Law and Jurisdiction: Specification of Swiss law application and jurisdiction
16. General Provisions: Standard boilerplate clauses including amendments, assignments, and entire agreement
1. Registration Rights: Include when the investor requires rights to register shares for public trading
2. Anti-Dilution Protection: Include when the investor requires protection against dilution from other share issuances
3. Voting Rights: Include when special voting arrangements are required for purchased shares
4. Transfer Restrictions: Include when specific limitations on share transfers are needed
5. Market Making Provisions: Include for listed companies requiring support for share trading liquidity
6. Regulatory Compliance: Include when specific Swiss regulatory requirements need detailed treatment
7. Information Rights: Include when investor requires specific information beyond statutory requirements
8. Board Observer Rights: Include when investor requires right to observe board meetings
1. Form of Drawdown Notice: Template for company to request share purchases
2. Pricing Calculation Examples: Detailed examples showing how share price will be calculated
3. Closing Checklist: List of documents and actions required for each closing
4. Company's Corporate Documents: Relevant corporate authorizations and registrations
5. Compliance Certificates: Templates for periodic compliance certification
6. Disclosure Schedule: Exceptions to representations and warranties
7. Form of Legal Opinions: Required format for legal opinions at closing
8. Technical Requirements: Details of any technical requirements for share issuance and trading
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