Cornerstone Investment Agreement for Hong Kong

Cornerstone Investment Agreement Template for Hong Kong

A cornerstone investment agreement is a crucial document in Hong Kong IPO transactions that establishes the terms and conditions under which a significant investor (cornerstone investor) commits to subscribe for shares in a company's initial public offering. The agreement, governed by Hong Kong law, typically includes detailed provisions on investment amount, lock-up periods, regulatory compliance requirements, and various representations and warranties. It serves as a key element in providing stability and confidence to the IPO process by securing substantial investment commitments before the public offering.

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What is a Cornerstone Investment Agreement?

The Cornerstone Investment Agreement is a fundamental document in Hong Kong IPO transactions, used when a company seeks to secure significant investment commitments prior to its public listing. This agreement is particularly important in the Hong Kong market, where cornerstone investors play a crucial role in providing stability and confidence to IPO offerings. The document details the terms under which institutional or strategic investors agree to subscribe for shares, including investment amounts, pricing mechanisms, lock-up periods, and regulatory compliance requirements. It must comply with Hong Kong Stock Exchange listing rules and Securities and Futures Commission regulations, while also addressing specific requirements under Hong Kong law regarding securities offerings and investor protection. The agreement typically forms part of the broader IPO documentation suite and requires careful consideration of both local and international regulatory frameworks, particularly when involving international cornerstone investors.

What sections should be included in a Cornerstone Investment Agreement?

1. Parties: Identification of the Company, the Cornerstone Investor, and any other relevant parties

2. Background: Context of the proposed IPO and cornerstone investment arrangement

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Subscription Obligation: Details of the investment commitment, including the subscription amount and pricing mechanism

5. Conditions Precedent: Conditions that must be satisfied before the investment obligation becomes binding

6. Closing: Mechanics and timing of the investment completion

7. Lock-up Undertakings: Restrictions on disposal of shares during the lock-up period

8. Representations and Warranties: Standard and specific warranties from both the investor and the company

9. Regulatory Compliance: Obligations to comply with relevant laws, regulations, and listing rules

10. Confidentiality: Obligations regarding confidential information and publicity

11. Termination: Circumstances under which the agreement may be terminated

12. Notices: Process for giving formal notices under the agreement

13. General Provisions: Standard boilerplate provisions including governing law, jurisdiction, and entire agreement

What sections are optional to include in a Cornerstone Investment Agreement?

1. Cornerstone Investor's Undertakings: Additional undertakings specific to certain types of investors, used when the investor has special status or requirements

2. Director Nomination Rights: Rights of the investor to nominate directors, included when agreed as part of the investment terms

3. Anti-dilution Rights: Protection against dilution in specific circumstances, included for strategic investors

4. Information Rights: Special information access rights, included for significant cornerstone investors

5. Fees and Expenses: Allocation of costs and expenses, included when not following standard market practice

6. Force Majeure: Provisions for extraordinary events, included in jurisdictions or situations with higher political or economic risk

7. Guarantee Provisions: Where the cornerstone investor's obligations are guaranteed by a parent company or other entity

What schedules should be included in a Cornerstone Investment Agreement?

1. Form of Completion Notice: Standard form for notifying completion of the investment

2. Subscription Details: Detailed breakdown of the subscription amount, number of shares, and pricing calculations

3. Warranties: Detailed warranties given by the cornerstone investor

4. Know Your Client Requirements: List of required KYC documentation and compliance requirements

5. Form of Lock-up Undertaking: Detailed terms of the lock-up restrictions and permitted transfers

6. Regulatory Approvals: List of required regulatory approvals and status

7. Contact Details: Contact information for all parties and their authorized representatives

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

Hong Kong

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Clauses
Relevant Industries

Financial Services

Technology

Healthcare

Real Estate

Manufacturing

Consumer Goods

Infrastructure

Energy

Telecommunications

Professional Services

Life Sciences

E-commerce

Education

Relevant Teams

Legal

Corporate Finance

Compliance

Investment

Corporate Secretarial

Risk Management

Board of Directors

Executive Management

Treasury

Investor Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Investment Director

Corporate Finance Director

IPO Manager

Compliance Officer

Legal Counsel

Investment Manager

Corporate Secretary

Finance Manager

Risk Manager

Board Director

Investment Banker

Fund Manager

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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