Equity Contribution Agreement Template for Pakistan

A comprehensive legal agreement governed by Pakistani law that outlines the terms and conditions under which an investor will make a capital contribution to a company in exchange for equity shares. The agreement details the investment amount, share allocation, payment terms, conditions precedent, representations and warranties, and post-investment rights and obligations. It ensures compliance with Pakistani corporate and securities laws, including the Companies Act 2017 and Securities Act 2015, while establishing the framework for the investment relationship between the parties.

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What is a Equity Contribution Agreement?

An Equity Contribution Agreement is a crucial document used when a company is seeking to raise capital through the issuance of equity shares to new or existing investors in Pakistan. This agreement is essential for both private and public companies, establishing the legal framework for the investment transaction while ensuring compliance with Pakistani corporate and securities regulations. The document typically includes detailed provisions about the investment structure, valuation, share class rights, governance arrangements, and investor protections. It must adhere to the requirements of the Companies Act 2017, Securities Act 2015, and other relevant Pakistani legislation, while also addressing practical aspects such as conditions precedent, closing mechanics, and post-closing obligations. The agreement is particularly important for documenting foreign investments, which must comply with additional regulatory requirements under Pakistani foreign investment laws.

What sections should be included in a Equity Contribution Agreement?

1. Parties: Identification of all parties to the agreement including the company, existing shareholders, and new investors

2. Background: Recitals explaining the context of the investment and company's current status

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

4. Equity Contribution: Details of the investment amount, number of shares, price per share, and payment mechanics

5. Conditions Precedent: Conditions that must be satisfied before the investment is made

6. Closing: Mechanics and requirements for completing the investment transaction

7. Representations and Warranties: Statements of fact and assurances from both the company and the investor

8. Covenants: Ongoing obligations of the parties post-investment

9. Regulatory Compliance: Compliance with Pakistani laws including Companies Act and Securities regulations

10. Confidentiality: Provisions regarding confidential information and its protection

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

12. Governing Law and Dispute Resolution: Choice of Pakistani law and dispute resolution mechanisms

13. General Provisions: Standard boilerplate clauses including amendments, assignments, and severability

What sections are optional to include in a Equity Contribution Agreement?

1. Tag-Along Rights: Include when protecting minority investors' right to join in sale of shares

2. Drag-Along Rights: Include when majority shareholders want right to force minority to join in sale

3. Anti-dilution Protection: Include when investors require protection against future down rounds

4. Board Representation: Include when investor is getting board seats as part of investment

5. Foreign Investment Provisions: Include when investor is foreign entity requiring compliance with FERA

6. Information Rights: Include when investors require specific reporting or inspection rights

7. Preemptive Rights: Include when investors require right to participate in future funding rounds

8. Exit Rights: Include when investors require specific exit mechanisms or timelines

What schedules should be included in a Equity Contribution Agreement?

1. Schedule 1 - Company Information: Details of company including corporate information, capital structure, and subsidiaries

2. Schedule 2 - Subscription Details: Detailed breakdown of investment amount, share numbers, and shareholding pattern

3. Schedule 3 - Conditions Precedent: Detailed list of all conditions to be satisfied before closing

4. Schedule 4 - Closing Checklist: List of all documents and actions required for closing

5. Schedule 5 - Company Warranties: Detailed warranties about the company's business and affairs

6. Schedule 6 - Investor Warranties: Warranties from the investor regarding investment capacity and compliance

7. Schedule 7 - Reserved Matters: List of decisions requiring investor approval

8. Appendix A - Form of Share Certificate: Template for share certificates to be issued

9. Appendix B - Corporate Authorizations: Forms of corporate approvals required for the investment

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

Pakistan

Publisher

Genie AI

Document Type

Equity Agreement

Cost

Free to use

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