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Equity Investment Agreement

Equity Investment Agreement Template for Hong Kong

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Key Requirements PROMPT example:

Equity Investment Agreement

"I need an Equity Investment Agreement under Hong Kong law for a Series A investment of HKD 50 million into a fintech startup, with standard minority investor protections and board representation rights for the lead investor who will take a 25% stake."

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Document background
The Equity Investment Agreement is a crucial document used in Hong Kong for structuring and implementing equity investments in companies. It is particularly relevant for private equity investments, venture capital funding rounds, and strategic corporate investments. The agreement comprehensively addresses the mechanics of the investment, protecting both the investor's interests through various rights and protections, and the company's interests through carefully structured governance provisions. It must comply with Hong Kong's legal framework, particularly the Companies Ordinance (Cap. 622) and Securities and Futures Ordinance (Cap. 571). The document is typically used when a company is seeking external investment for growth, expansion, or working capital purposes, and serves as the foundational document governing the relationship between the investor and the company going forward.
Suggested Sections

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

2. Background: Context of the investment and brief description of the company's business

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

4. Investment Terms: Details of the investment amount, number of shares, price per share

5. Completion: Conditions precedent, completion mechanics, and timing

6. Representations and Warranties: Standard representations and warranties from the company and founders

7. Pre-Completion Covenants: Obligations of parties between signing and completion

8. Post-Completion Covenants: Ongoing obligations after the investment is completed

9. Board and Management: Board composition, appointment rights, and management structure

10. Reserved Matters: Decisions requiring investor consent

11. Share Transfer Restrictions: Limitations on transfer of shares and exit provisions

12. Confidentiality: Confidentiality obligations and permitted disclosures

13. Announcements: Rules regarding public announcements about the investment

14. Notices: Process for giving formal notices under the agreement

15. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, etc.

Optional Sections

1. Anti-Dilution Rights: Protection for investors against future down rounds - include if negotiated by investors

2. Tag-Along Rights: Right of investors to join in sales by other shareholders - include for minority protection

3. Drag-Along Rights: Right to force minority shareholders to join in a sale - include if majority investors require

4. Liquidation Preference: Priority rights in liquidation or exit - include if negotiated by investors

5. Founder Vesting: Vesting schedule for founder shares - include for early-stage investments

6. ESOP: Employee share option pool provisions - include if company has/plans ESOP

7. Non-Compete and Non-Solicit: Restrictions on founders/key employees - include for key person protection

8. Information Rights: Specific reporting requirements - include for significant investments

9. Registration Rights: Rights for future IPO registration - include for later-stage investments

Suggested Schedules

1. Company Information: Details of company registration, directors, shareholders, etc.

2. Capitalization Table: Pre and post-investment share capital structure

3. Conditions Precedent: Detailed list of conditions to be satisfied before completion

4. Completion Requirements: Detailed list of documents and actions required at completion

5. Reserved Matters List: Comprehensive list of matters requiring investor consent

6. Warranties: Detailed warranties about the company's business and affairs

7. Disclosure Letter: Exceptions and qualifications to the warranties

8. Key Terms Summary: Summary of key commercial terms for quick reference

9. Form of Board Resolution: Template board resolutions for completion

10. Form of Shareholders' Resolution: Template shareholders' resolutions for completion

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Affiliate
Anti-Dilution Rights
Articles of Association
Board
Business Day
Business Plan
Closing
Closing Date
Companies Ordinance
Company
Completion
Conditions Precedent
Confidential Information
Connected Person
Consideration
Control
Deed of Adherence
Directors
Disclosure Letter
Drag-Along Rights
Encumbrance
Event of Default
Exit Event
Financial Year
First Completion
Fully Diluted Basis
Group
Group Company
Hong Kong
Independent Director
Investment Amount
Investor Director
Investor Shares
IPO
Key Employees
Key Performance Indicators
Liquidation Event
Liquidation Preference
Material Adverse Change
Material Contract
Ordinary Shares
Parties
Permitted Transferee
Pre-emption Rights
Preferred Shares
Purchase Price
Qualified IPO
Related Party Transaction
Reserved Matters
Securities and Futures Ordinance
Series A Shares
Share Capital
Shareholders
Shareholders' Agreement
Subscription Price
Subsidiary
Tag-Along Rights
Transaction Documents
Transfer
Valuation
Warranties
Working Day
Clauses
Interpretation
Share Subscription
Consideration
Conditions Precedent
Completion
Pre-Completion Obligations
Post-Completion Obligations
Representations and Warranties
Board Composition
Reserved Matters
Information Rights
Pre-emptive Rights
Anti-dilution Protection
Share Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Exit Rights
Non-Competition
Non-Solicitation
Confidentiality
Announcements
Liquidation Preference
Dividend Rights
Conversion Rights
Registration Rights
ESOP Provisions
Founder Commitments
Default
Termination
Indemnification
Assignment
Notices
Costs
Governing Law
Dispute Resolution
Force Majeure
Severability
Entire Agreement
Amendments
Waiver
Relevant Industries

Technology

Financial Services

Real Estate

Healthcare

E-commerce

Manufacturing

Consumer Goods

Educational Services

Professional Services

Biotechnology

Clean Energy

Infrastructure

Media and Entertainment

Telecommunications

Retail

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Investment

Due Diligence

Risk Management

Board of Directors

Executive Management

Company Secretarial

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Investment Director

Corporate Lawyer

Investment Manager

Company Secretary

Due Diligence Manager

Compliance Officer

Legal Counsel

Investment Analyst

Portfolio Manager

Managing Director

Finance Director

Business Development Director

Industries
Companies Ordinance (Cap. 622): Primary legislation governing company formation, share issuance, transfer of shares, and corporate governance requirements in Hong Kong
Securities and Futures Ordinance (Cap. 571): Regulates securities, investment products, and related activities, including disclosure requirements and investor protection measures
Contract and Rights of Third Parties Ordinance (Cap. 623): Governs contract formation, enforcement, and third-party rights in contractual arrangements
Stamp Duty Ordinance (Cap. 117): Covers stamp duty requirements for share transfers and investment agreements
Anti-Money Laundering and Counter-Terrorist Financing Ordinance (Cap. 615): Establishes requirements for customer due diligence and transaction monitoring in financial dealings
Personal Data (Privacy) Ordinance (Cap. 486): Governs the collection and handling of personal data in commercial transactions
Inland Revenue Ordinance (Cap. 112): Addresses tax implications of equity investments and share transfers
Competition Ordinance (Cap. 619): Ensures investment arrangements do not violate competition law requirements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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