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Investment Commitment Agreement Template for Canada

A Canadian Investment Commitment Agreement is a legally binding document that formalizes the terms and conditions under which an investor agrees to provide capital to a business or project. This agreement, governed by Canadian federal and provincial laws, outlines the investment amount, timing, conditions precedent, and post-investment rights and obligations. It incorporates requirements from various Canadian regulatory frameworks, including provincial securities laws, the Investment Canada Act for foreign investments, and relevant corporate legislation. The document serves as a crucial foundation for investment transactions, ensuring compliance with Canadian legal requirements while protecting both investor and investee interests.

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What is a Investment Commitment Agreement?

The Investment Commitment Agreement is a fundamental document in Canadian investment transactions, used when an investor (institutional or individual) commits to providing capital to a business or project. This agreement is particularly important in the Canadian context as it must comply with both federal and provincial regulatory requirements, including securities laws, foreign investment regulations, and corporate legislation. The document typically outlines the specific terms of the investment, conditions that must be met before funding, investment mechanics, and post-investment rights. An Investment Commitment Agreement becomes necessary when parties want to create a binding obligation to invest prior to the actual investment, often used in staged investments, complex transactions, or when certain conditions must be satisfied before the investment can close. The agreement provides certainty to all parties while ensuring compliance with Canadian legal and regulatory frameworks.

What sections should be included in a Investment Commitment Agreement?

1. Parties: Identification of all parties to the agreement, including full legal names and addresses

2. Background: Context of the investment opportunity and purpose of the agreement

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

4. Investment Commitment: Details of the investment amount, type, and form of investment

5. Conditions Precedent: Conditions that must be satisfied before the investment obligation becomes binding

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

7. Representations and Warranties: Statements of fact and assurances from both parties

8. Covenants: Ongoing obligations of the parties throughout the investment period

9. Regulatory Compliance: Obligations regarding securities laws, foreign investment rules, and other applicable regulations

10. Confidentiality: Protection of confidential information exchanged during the investment process

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

12. Notices: Process for formal communications between parties

13. General Provisions: Standard boilerplate clauses including governing law, assignment, and amendments

What sections are optional to include in a Investment Commitment Agreement?

1. Investment Committee Approval: Required when the investor needs internal committee approval before closing

2. Co-Investment Rights: Used when other investors may participate in the investment

3. Anti-Dilution Protection: Included when protecting against future dilutive issuances

4. Tag-Along Rights: Added when investors want the right to join in future sales

5. Board Representation: Included when the investment includes governance rights

6. Information Rights: Details specific reporting requirements, used for significant investments

7. Pre-emptive Rights: Added when investors want rights to participate in future fundraising

8. Foreign Investment Provisions: Required when involving non-Canadian investors

9. Tax Matters: Included when special tax considerations apply to the investment

What schedules should be included in a Investment Commitment Agreement?

1. Schedule A - Investment Terms: Detailed terms of the investment including amount, timing, and form

2. Schedule B - Closing Conditions: Comprehensive list of all conditions precedent to closing

3. Schedule C - Disclosure Schedule: Exceptions and qualifications to representations and warranties

4. Schedule D - Required Consents: List of third-party and regulatory consents required

5. Schedule E - Corporate Information: Details of corporate structure, capitalization, and ownership

6. Schedule F - Form of Shareholders Agreement: Draft or terms of shareholders agreement to be entered into

7. Schedule G - Investment Securities Terms: Details of rights and preferences of investment securities

8. Schedule H - Compliance Certificates: Forms of certificates required at closing

9. Appendix 1 - Wire Instructions: Banking and payment details for the investment

10. Appendix 2 - Form of Legal Opinions: Required forms of legal opinions for closing

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Canada

Publisher

Ƶ

Cost

Free to use

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