Preference Shares Investment Agreement for Singapore

Preference Shares Investment Agreement Template for Singapore

A Preference Shares Investment Agreement under Singapore law is a comprehensive legal document that governs the terms and conditions of an investment made through preference shares. It details the rights and obligations of both the issuing company and the investors, including dividend rights, voting rights, conversion privileges, and liquidation preferences. The agreement must comply with Singapore's Companies Act and Securities and Futures Act, incorporating specific protections and mechanisms relevant to Singapore's legal framework.

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What is a Preference Shares Investment Agreement?

The Preference Shares Investment Agreement is a crucial document used when a company seeks to raise capital by issuing preference shares to investors. Under Singapore law, this agreement outlines the specific rights attached to the preference shares, including dividend preferences, voting rights, and potential conversion features. It's particularly relevant for companies seeking growth capital while maintaining existing control structures, as preference shares often offer investors priority in dividends and liquidation proceeds without necessarily conferring voting control. The agreement must comply with Singapore's robust regulatory framework, particularly the Companies Act 1967 and related securities regulations.

What sections should be included in a Preference Shares Investment Agreement?

1. Parties: Identification of the company and investor(s)

2. Background: Context of the investment and company's current status

3. Definitions: Key terms used throughout the agreement

4. Subscription Details: Number, class, and price of preference shares

5. Preference Share Rights: Dividend rights, voting rights, conversion rights, and liquidation preferences

6. Completion Mechanics: Process and conditions for completing the investment

7. Warranties and Representations: Standard company and investor warranties

8. Governing Law and Jurisdiction: Specification of Singapore law and courts

What sections are optional to include in a Preference Shares Investment Agreement?

1. Anti-dilution Protection: Protection against future share issuances, used for larger investments

2. Board Rights: Investor board representation, used when significant stake acquired

3. Tag-Along Rights: Right to join in sale of shares, common in minority protection

4. Drag-Along Rights: Right to force minority shareholders to join sale, used in majority investments

What schedules should be included in a Preference Shares Investment Agreement?

1. Schedule 1: Share Capital Structure: Pre and post-investment capitalization table

2. Schedule 2: Warranties: Detailed company warranties

3. Schedule 3: Conditions Precedent: List of conditions to be satisfied before completion

4. Schedule 4: Preference Share Terms: Detailed terms and conditions of the preference shares

5. Appendix A: Form of Board Resolution: Template board resolution approving the investment

6. Appendix B: Share Certificate Form: Template preference share certificate

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

Singapore

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Companies Act 1967: Primary legislation governing company formation, structure, and operations in Singapore. Key sections include Division 4 (Shares) and Division 7A (Preference Shares), which regulate share issuance, rights, transfers, and capital modifications.

Securities and Futures Act 2001: Regulates securities markets, offerings, and trading in Singapore. Includes provisions for disclosure requirements, investor protection, and securities offering regulations.

Civil Law Act: Provides the fundamental framework for contract law in Singapore, including principles of contract formation, enforcement, and remedies.

Income Tax Act: Governs taxation matters including tax treatment of preference share dividends and related withholding tax obligations for investors and companies.

Stamp Duties Act: Regulates stamp duty obligations applicable to share transfers, agreements, and related documents in Singapore.

Competition Act: Governs competition law and merger control, particularly relevant when investments involve substantial shareholding or market concentration.

MAS Guidelines: Regulatory guidelines issued by the Monetary Authority of Singapore, particularly relevant for regulated sectors and specific types of financial instruments.

Singapore Code of Corporate Governance: Provides principles and guidelines for corporate governance standards, including shareholder rights protection and best practices for company management.

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