Standby Equity Purchase Agreement Template for Saudi Arabia

The Standby Equity Purchase Agreement (SEPA) is a sophisticated financing instrument used in the Saudi Arabian market when a listed company requires flexible access to equity capital over an extended period. This document is particularly relevant in scenarios where companies need to ensure availability of funding for growth initiatives, working capital, or strategic investments while maintaining compliance with Saudi regulations and Sharia principles. The agreement typically details the commitment of an investment bank or financial institution to purchase newly issued shares, specific pricing mechanisms usually based on market prices with predetermined discounts, draw-down procedures, regulatory compliance requirements including Capital Market Authority (CMA) approvals, and necessary Sharia-compliant structures. It's commonly used in sectors requiring significant capital investment or companies experiencing rapid growth phases in the Saudi market.

1. Parties: Identification of the Company (issuer) and the Investor (purchaser), including full legal names, registration details, and addresses

2. Background: Context of the agreement, including the company's intention to raise capital and the investor's willingness to provide standby purchase commitment

3. Definitions and Interpretation: Comprehensive definitions of technical terms, calculation methods, and interpretation rules

4. Purchase Commitment: Core terms of the standby purchase commitment, including maximum commitment amount and duration

5. Pricing Mechanism: Detailed formula for calculating the purchase price of shares, including any discounts and adjustments

6. Draw Down Mechanics: Procedures and conditions for initiating and completing each draw down under the SEPA

7. Conditions Precedent: Prerequisites that must be satisfied before the agreement becomes effective and before each draw down

8. Representations and Warranties: Standard and specific declarations by both parties, including Sharia compliance representations

9. Covenants: Ongoing obligations of both parties throughout the agreement term

10. Regulatory Compliance: Obligations regarding Saudi capital market regulations and CMA requirements

11. Events of Default: Circumstances constituting default and corresponding remedies

12. Term and Termination: Duration of the agreement and circumstances allowing early termination

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Specification of Saudi law as governing law and jurisdiction for disputes

15. General Provisions: Standard boilerplate clauses adapted to Saudi law requirements