Securities Purchase Agreement for Hong Kong

Securities Purchase Agreement Template for Hong Kong

A comprehensive legal agreement governed by Hong Kong law that documents the terms and conditions for the purchase and sale of securities between parties. The agreement addresses key aspects including purchase price, payment terms, representations and warranties, conditions precedent, and completion mechanics, while ensuring compliance with Hong Kong securities regulations and the Securities and Futures Ordinance. It includes provisions for regulatory approvals, disclosure requirements, and investor protections specific to the Hong Kong legal framework, making it suitable for both private and public company securities transactions.

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What is a Securities Purchase Agreement?

The Securities Purchase Agreement is a crucial transaction document used in Hong Kong for documenting the sale and purchase of securities, whether in private or public companies. It serves as the primary contract between sellers and purchasers of securities, detailing all material terms of the transaction including price, payment mechanisms, representations and warranties, and closing conditions. The agreement must comply with Hong Kong's regulatory framework, particularly the Securities and Futures Ordinance and, where applicable, Stock Exchange requirements. It's commonly used in various contexts including private placements, strategic investments, and pre-IPO funding rounds. The document typically includes comprehensive provisions for due diligence findings, regulatory compliance, and risk allocation between parties, while incorporating specific requirements of Hong Kong securities laws and corporate regulations.

What sections should be included in a Securities Purchase Agreement?

1. Parties: Identification of the seller(s) and purchaser(s) with full legal names and addresses

2. Background: Recitals explaining the context of the transaction and the parties' intentions

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

4. Sale and Purchase of Securities: Core transaction terms including number and type of securities, purchase price, and payment terms

5. Purchase Price and Payment: Detailed terms of consideration, payment method, and timing

6. Conditions Precedent: Conditions that must be satisfied before completion of the transaction

7. Completion: Timing, location, and mechanics of closing, including actions and deliverables required at completion

8. Representations and Warranties: Statements of fact and assurances from both parties

9. Covenants: Pre-completion and post-completion obligations of the parties

10. Indemnification: Rights and obligations regarding compensation for losses or breaches

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

12. Confidentiality: Obligations regarding non-disclosure of transaction information

13. Notices: Process and requirements for formal communications between parties

14. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement

What sections are optional to include in a Securities Purchase Agreement?

1. Regulatory Compliance: Specific provisions addressing SFC requirements and other regulatory obligations - required for regulated securities

2. Tag-Along Rights: Rights of minority shareholders to join in the sale - relevant when selling controlling interest

3. Drag-Along Rights: Rights to force minority shareholders to join the sale - relevant for majority shareholders

4. Employee Matters: Provisions regarding employee stock options or shares - needed if employees hold securities

5. Anti-Dilution Protection: Protection against future dilution of shareholding - relevant for minority investors

6. Registration Rights: Rights to register securities for public trading - relevant for pre-IPO companies

7. Board Representation: Rights to appoint directors - relevant for significant investors

8. Multiple Closings: Provisions for transactions occurring in stages - needed for phased investments

What schedules should be included in a Securities Purchase Agreement?

1. Schedule of Securities: Detailed description of the securities being purchased, including class, number, and par value

2. Disclosure Schedule: Exceptions and qualifications to the representations and warranties

3. Company Information: Details of the company whose securities are being purchased, including corporate information and capital structure

4. Existing Encumbrances: List of any existing liens, charges, or other encumbrances on the securities

5. Required Consents: List of third-party and regulatory consents required for the transaction

6. Form of Share Certificate: Template of share certificates to be issued (if physical certificates are required)

7. Completion Checklist: List of all documents and actions required at completion

8. Shareholders' Rights: Summary of any special rights attached to the securities being purchased

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

Security Agreement

Cost

Free to use
Clauses
Relevant Industries

Financial Services

Technology

Real Estate

Healthcare

Manufacturing

Retail

Energy

Infrastructure

Telecommunications

Professional Services

Education

Media and Entertainment

Biotechnology

E-commerce

Consumer Goods

Relevant Teams

Legal

Finance

Corporate Development

Investor Relations

Compliance

Risk Management

Board of Directors

Executive Management

Corporate Secretariat

Treasury

Investment

Due Diligence

Strategic Planning

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

General Counsel

Corporate Secretary

Investment Director

Managing Director

Finance Director

Compliance Officer

Investment Manager

Corporate Lawyer

Financial Controller

Head of Corporate Development

Director of Investor Relations

Risk Manager

Board Director

Company Secretary

Investment Banker

Private Equity Manager

Venture Capital Manager

Industries
Securities and Futures Ordinance (Cap. 571): The primary legislation governing securities, futures, and other financial products in Hong Kong. It provides the regulatory framework for securities transactions and establishes the Securities and Futures Commission (SFC).
Companies Ordinance (Cap. 622): Governs company formation, operation, and management in Hong Kong, including provisions related to share issuance, transfer, and registration.
Contract and Rights of Third Parties Ordinance (Cap. 623): Provides the legal framework for contract formation and enforcement, including provisions affecting third-party rights in contractual arrangements.
Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615): Sets out requirements for customer due diligence and record-keeping in financial transactions, including securities purchases.
Stamp Duty Ordinance (Cap. 117): Governs the stamp duty payable on transfers of Hong Kong stock and marketable securities.
Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited: If the securities are listed, these rules set out requirements for listed companies and their securities transactions.
Personal Data (Privacy) Ordinance (Cap. 486): Regulates the collection and handling of personal data, which may be relevant for individual investors and KYC requirements.
Securities and Futures (Professional Investor) Rules (Cap. 571D): Defines professional investors and their treatment under securities regulations, which may affect disclosure requirements and other obligations.
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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