Standby Equity Distribution Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Standby Equity Distribution Agreement

Need a Standby Equity Distribution Agreement under Hong Kong law for our tech company to secure up to HKD 500 million in flexible funding from Asia Investment Partners Ltd, with monthly draw-down options and standard anti-dilution provisions.

Document background

The Standby Equity Distribution Agreement (SEDA) is primarily utilized by Hong Kong listed companies seeking flexible access to growth capital without the immediate dilution of a traditional equity offering. This document becomes relevant when a company requires a reliable source of funding that can be accessed incrementally based on market conditions and capital needs. The agreement typically includes detailed provisions covering draw-down mechanics, pricing formulas based on Hong Kong market trading parameters, regulatory compliance requirements, and investor protections. It's particularly suitable for companies with varying capital needs or those undertaking phased expansion projects. The document must comply with Hong Kong Securities and Futures Ordinance requirements, Stock Exchange listing rules, and other relevant financial regulations while providing a clear framework for both issuer and investor obligations.

Suggested Sections

1. Parties: Identification of the issuing company and the investor/investment entity

2. Background: Context of the agreement and the parties' intentions

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Equity Distribution Commitment: Core terms of the standby commitment including maximum commitment amount and duration

5. Draw Down Mechanics: Detailed process for requesting and executing draw downs

6. Pricing Mechanism: Formula and methodology for determining the purchase price of shares

7. Conditions Precedent: Conditions that must be satisfied before the agreement becomes effective

8. Representations and Warranties: Standard and specific warranties from both parties

9. Covenants: Ongoing obligations of the parties during the agreement term

10. Regulatory Compliance: Obligations regarding Hong Kong securities laws and stock exchange rules

11. Events of Default: Circumstances constituting default and consequences

12. Termination: Conditions and process for ending the agreement

13. Confidentiality: Protection of confidential information

14. Notices: Process for formal communications between parties

15. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, etc.

Optional Sections

1. Multiple Tranches: Required when the equity distribution is structured in multiple phases or tranches

2. Registration Rights: Needed if the investor requires rights to register the shares for public trading

3. Market Making Provisions: Include when there are specific requirements for maintaining market liquidity

4. Voting Rights: Required when special voting arrangements are needed for the distributed shares

5. Anti-Dilution Protection: Include when the investor requires protection against future dilution

6. Share Lending Arrangements: Needed if the agreement includes provisions for temporary share lending

7. Directors' Nomination Rights: Include if the investor gets rights to nominate board members

Suggested Schedules

1. Form of Draw Down Notice: Template for the company to request a draw down

2. Pricing Calculation Examples: Detailed examples of how the share price will be calculated

3. Conditions Precedent Documents: List of required documents and forms for satisfying conditions precedent

4. Company Information: Details of the company's share capital, corporate structure, and existing securities

5. Regulatory Compliance Checklist: Checklist of Hong Kong regulatory requirements and necessary filings

6. Form of Compliance Certificate: Template for periodic compliance certification

7. Trading Parameters: Detailed trading rules and restrictions

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Financial Services

Technology

Healthcare

Real Estate

Manufacturing

Renewable Energy

Mining

Biotechnology

Infrastructure

Telecommunications

Relevant Teams

Legal

Finance

Compliance

Corporate Secretariat

Treasury

Risk Management

Corporate Development

Investor Relations

Board of Directors

Executive Management

Relevant Roles

Chief Financial Officer

General Counsel

Corporate Secretary

Finance Director

Compliance Officer

Investment Banking Director

Corporate Finance Manager

Treasury Manager

Legal Counsel

Risk Manager

Board Director

Chief Executive Officer

Investment Relations Manager

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