Preferred Stock Purchase Agreement Template for England and Wales

A Preferred Stock Purchase Agreement under English and Welsh law is a legally binding document that outlines the terms and conditions for the purchase of preferred shares in a company. It establishes the rights, privileges, and obligations of both the issuing company and the investors, including voting rights, dividend preferences, and liquidation preferences. The agreement must comply with the Companies Act 2006 and other relevant UK legislation, providing a framework for investment while protecting both parties' interests.

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What is a Preferred Stock Purchase Agreement?

The Preferred Stock Purchase Agreement is commonly used when companies seek to raise capital through the issuance of preferred shares, particularly in growth stages or significant expansion phases. This document, governed by English and Welsh law, sets out detailed terms for the investment, including share price, investor rights, and protection mechanisms. It's particularly crucial for startups and scale-ups seeking institutional investment, as it provides the necessary legal framework for sophisticated investment structures while ensuring compliance with UK company law and financial regulations.

What sections should be included in a Preferred Stock Purchase Agreement?

1. Parties: Identification of the company and investors

2. Background: Context of the transaction and company status

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale: Core terms of the preferred stock purchase

5. Purchase Price: Price per share and payment terms

6. Closing Conditions: Conditions precedent to completion

7. Representations and Warranties: Company and investor statements of fact

8. Covenants: Ongoing obligations of parties

What sections are optional to include in a Preferred Stock Purchase Agreement?

1. Registration Rights: Rights to register shares for public trading - include when future IPO is contemplated

2. Board Rights: Investor rights to board representation - include for significant investments

3. Anti-dilution Protection: Protection against future down rounds - include when requested by investors

What schedules should be included in a Preferred Stock Purchase Agreement?

1. Schedule of Investors: Details of all participating investors

2. Certificate of Designation: Terms of preferred stock

3. Disclosure Schedule: Exceptions to representations and warranties

4. Form of Investor Rights Agreement: Template for investor rights

5. Capitalization Table: Pre and post-money capitalization

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

Jurisdiction

England and Wales

Publisher

Genie AI

Document Type

Statement of Work

Cost

Free to use

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