Finders Fee Agreement For Raising Capital Template for England and Wales

A Finders Fee Agreement For Raising Capital is a crucial legal document that governs the relationship between your company and individuals or entities who help secure investment or funding. This agreement establishes clear terms for compensation, services, and regulatory compliance under England and Wales law, protecting both parties while ensuring adherence to UK financial services regulations.

When do you need this document?

You need this agreement when engaging third parties to introduce potential investors, arrange funding meetings, or assist in capital raising activities. This includes situations where investment brokers, business consultants, or networking contacts help connect your company with venture capitalists, private equity firms, or individual investors. The agreement is essential when offering success-based compensation or retainer fees for capital raising services. You should also use this document when working with finders who may be operating close to regulated activity boundaries, ensuring their services remain compliant with FCA requirements. Additionally, this agreement is necessary when establishing exclusive arrangements or when the finder will have access to confidential business information during the capital raising process.

Key legal considerations

The most critical consideration is ensuring the finder's activities do not constitute regulated activities under the Financial Services and Markets Act 2000 without proper authorization. The agreement must clearly define the scope of services to avoid unauthorized financial promotion or arranging deals in investments. Fee structures require careful drafting, particularly success fees tied to funding amounts, to ensure they're reasonable and legally enforceable. Confidentiality provisions are essential given the sensitive financial information typically shared during capital raising. The agreement should address potential conflicts of interest, especially if the finder works with multiple parties or has existing relationships with target investors. Termination clauses must be clearly defined, including what happens to fees if the agreement ends before funding completion. You should also consider including provisions for regulatory compliance monitoring and requiring the finder to maintain appropriate professional indemnity insurance.

Legal requirements in England and Wales

Under England and Wales law, finder agreements must comply with the Financial Services and Markets Act 2000, particularly Section 19 which prohibits carrying out regulated activities without authorization. The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 defines what constitutes regulated activities, and your agreement must ensure the finder's services fall outside these definitions or that they hold appropriate FCA authorization. The agreement must also comply with FCA regulations regarding financial promotions and investor protection rules. Contract law principles require the agreement to have clear consideration, defined terms, and mutual obligations. Data protection compliance under UK GDPR is essential when sharing investor or company information. The agreement should specify governing law as England and Wales and designate appropriate jurisdiction for dispute resolution. Professional conduct standards may apply if the finder is a member of relevant professional bodies, and the agreement should acknowledge these requirements.