Capital Raising Agreement Template for New Zealand

A Capital Raising Agreement is a comprehensive legal document that governs the relationship between your company and investors when raising equity capital in New Zealand. This agreement establishes the terms under which investors provide funding in exchange for shares or convertible securities, creating binding obligations and rights for all parties involved.

When do you need this document?

You need a Capital Raising Agreement when your company is seeking significant investment through equity or convertible securities. This typically occurs during Series A or later funding rounds, when bringing on strategic investors, or when conducting substantial capital injections to fund growth, expansion, or strategic initiatives. The agreement is also essential when foreign investors are participating, as it helps ensure compliance with the Overseas Investment Act 2005. If your company is transitioning from angel investment to institutional funding, this document provides the legal framework necessary for professional investment relationships.

Key legal considerations

Several critical legal elements must be addressed in your Capital Raising Agreement. Investment terms including valuation, share price, and the number of shares being issued form the foundation of the agreement. You must clearly define investor rights, including voting rights, information rights, and board representation. Anti-dilution provisions protect investors from future down rounds, while drag-along and tag-along rights govern future share transfers. Warranties and representations from your company provide investors with legal recourse if material information proves incorrect. The agreement should also address exit provisions, including rights of first refusal and co-sale rights, which become crucial during potential acquisitions or public offerings.

Legal requirements in New Zealand

Your Capital Raising Agreement must comply with New Zealand's Financial Markets Conduct Act 2013, which governs disclosure requirements and investor protections. Under the Companies Act 1993, you must ensure proper share issuance procedures and maintain accurate shareholder records. If your capital raising involves foreign investors acquiring 25% or more of your company, or if sensitive assets are involved, compliance with the Overseas Investment Act 2005 may be required. Anti-money laundering obligations under the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 require proper investor verification and due diligence. Tax implications under the Income Tax Act 2007 must also be considered, particularly regarding the treatment of different share classes and convertible instruments. Your agreement should include appropriate disclosures and ensure all regulatory filings are completed within required timeframes.