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Equity Contribution Agreement Template for Hong Kong

A comprehensive legal agreement governed by Hong Kong law that documents the terms and conditions under which an investor contributes capital to a company in exchange for equity shares. The agreement details the investment amount, number and class of shares to be issued, payment terms, conditions precedent, completion mechanics, representations and warranties, and post-completion obligations. It incorporates Hong Kong corporate law requirements, including compliance with the Companies Ordinance and relevant securities regulations, while addressing stamp duty considerations and any applicable foreign investment requirements.

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What is a Equity Contribution Agreement?

An Equity Contribution Agreement is a crucial document used in Hong Kong corporate transactions when a company seeks to raise capital through the issuance of new shares to investors. This agreement is particularly important in the Hong Kong business environment, where capital raising activities are subject to specific regulatory requirements under the Companies Ordinance and Securities and Futures Ordinance. The document sets out the complete framework for the investment, including the contribution amount, share issuance details, conditions precedent, completion mechanics, and post-completion obligations. It's commonly used in both private and public company contexts, though the specific requirements and complexity may vary depending on the size of the investment and the nature of the parties involved. The agreement must comply with Hong Kong corporate law requirements and typically includes provisions addressing stamp duty obligations, which are particularly relevant in the Hong Kong context.

What sections should be included in a Equity Contribution Agreement?

1. Parties: Identification of the parties to the agreement including the company and the contributor(s)

2. Background: Recitals explaining the context and purpose of the equity contribution

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

4. Equity Contribution: Details of the contribution amount and corresponding equity to be issued

5. Payment Terms: Timing and method of payment for the equity contribution

6. Conditions Precedent: Conditions that must be satisfied before completion

7. Completion: Mechanics and requirements for closing the transaction

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

9. Covenants: Ongoing obligations of the parties

10. Term and Termination: Duration of the agreement and circumstances for termination

11. Confidentiality: Obligations regarding confidential information

12. Notices: Process for formal communications between parties

13. General Provisions: Boilerplate clauses including governing law, jurisdiction, etc.

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

1. Multiple Closings: Required when the equity contribution will occur in multiple tranches

2. Regulatory Compliance: Required when specific regulatory approvals or filings are needed

3. Existing Shareholder Rights: Required when there are existing shareholders with pre-emptive or other rights

4. Board Appointment Rights: Required when the contributor will receive board representation rights

5. Corporate Governance: Required when specific governance arrangements are being put in place

6. Tag-Along and Drag-Along Rights: Required when these share transfer rights are being granted

7. Anti-dilution Protection: Required when the contributor is being granted anti-dilution rights

8. Information Rights: Required when specific information access rights are being granted to the contributor

What schedules should be included in a Equity Contribution Agreement?

1. Company Information: Details of the company's share capital, directors, and corporate information

2. Contribution Details: Detailed breakdown of the equity contribution amount and calculation

3. Form of Share Certificate: Template for the share certificate to be issued

4. Completion Checklist: List of documents and actions required for completion

5. Warranties: Detailed warranties given by the company

6. Relevant Contracts: List and/or copies of material contracts referenced in the agreement

7. Corporate Resolutions: Forms of corporate resolutions required for completion

8. Regulatory Filings: Forms of any required regulatory filings

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

Hong Kong

Publisher

Ƶ

Document Type

Equity Agreement

Cost

Free to use

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