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Equity Investment Agreement

Equity Investment Agreement Template for India

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Key Requirements PROMPT example:

Equity Investment Agreement

"I need an Equity Investment Agreement for a Series A round where three venture capital firms are investing ₹50 crore collectively in my technology startup, with the investment to be completed by March 2025 and including standard anti-dilution and tag-along rights."

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Document background
The Equity Investment Agreement is a crucial document used when a company seeks to raise capital through the sale of equity shares to investors in India. It is particularly relevant for startups, growing businesses, and established companies looking for expansion capital. The agreement must comply with Indian corporate law framework, including the Companies Act 2013, Securities regulations, and where applicable, foreign investment rules under FEMA. The document typically includes detailed provisions on investment terms, shareholder rights, governance mechanisms, exit options, and protective provisions for both investors and existing shareholders. It serves as the foundation for the investment relationship and is often accompanied by amendments to the company's Articles of Association to incorporate special rights and privileges granted to investors.
Suggested Sections

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

2. Background: Context of the investment, company's business, and purpose of the agreement

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

4. Investment Terms: Details of investment amount, number of shares, price per share, and payment terms

5. Conditions Precedent: Conditions that must be satisfied before completion of the investment

6. Completion: Steps to be taken at closing, including documentation and filing requirements

7. Representations and Warranties: Statements of fact by the company and existing shareholders

8. Investor Rights: Key rights of the investor including board representation, veto rights, and information rights

9. Transfer Restrictions: Restrictions on transfer of shares and exit provisions

10. Pre-emptive Rights: Rights of first refusal and anti-dilution protections

11. Covenants: Ongoing obligations of the company and existing shareholders

12. Events of Default: Circumstances constituting default and consequences

13. Term and Termination: Duration of the agreement and termination provisions

14. Confidentiality: Protection of confidential information

15. Governing Law and Dispute Resolution: Applicable law and method of resolving disputes

16. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability

Optional Sections

1. Tag-Along Rights: Optional provision giving investors right to join in sale of shares by other shareholders

2. Drag-Along Rights: Optional provision allowing majority shareholders to force minority shareholders to join in sale

3. Foreign Investment Compliance: Required when investor is foreign entity, covering FEMA compliance

4. Nominee Director Provisions: Detailed rights and protections for investor-nominated directors

5. Strategic Rights: Special rights for strategic investors including business cooperation terms

6. Employee Stock Options: Provisions regarding ESOP pool and its impact on investor shareholding

7. Anti-Money Laundering Provisions: Additional compliance requirements for certain types of investors

8. Multiple Closing Provisions: Required for investments happening in tranches

Suggested Schedules

1. Schedule 1 - Details of the Company: Corporate information, capitalization table, and organizational documents

2. Schedule 2 - Conditions Precedent: Detailed list of conditions to be satisfied before completion

3. Schedule 3 - Warranties: Comprehensive list of representations and warranties

4. Schedule 4 - Reserved Matters: List of actions requiring investor consent

5. Schedule 5 - Completion Steps: Detailed closing checklist and requirements

6. Schedule 6 - Financial Statements: Latest financial statements of the company

7. Schedule 7 - Material Contracts: List of important contracts and arrangements

8. Appendix A - Share Certificate: Form of share certificate to be issued

9. Appendix B - Board Resolution: Format of board resolution approving the investment

10. Appendix C - Shareholders' Resolution: Format of shareholders' resolution approving the investment

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
Agreement
Anti-Dilution Rights
Applicable Law
Articles of Association
Board
Business Day
Business Plan
Closing
Closing Date
Companies Act
Company
Competition Act
Completion
Conditions Precedent
Confidential Information
Control
Deed of Adherence
Director
Disclosure Letter
Encumbrance
Equity Shares
Event of Default
Exercise Notice
Exercise Period
Exit Event
FEMA
Financial Statements
Financial Year
Fully Diluted Basis
Government Authority
Group Company
INR
Investment Amount
Investor
Investor Director
IPO
Key Management Personnel
Material Adverse Effect
Memorandum of Association
New Securities
Nominee Director
Ordinary Course of Business
Parties
Pre-emptive Rights
Preferred Rights
Promoter
Quarter
RBI
Related Party
Reserved Matters
SEBI
Share Capital
Shareholders
Shareholders' Agreement
Subscription Price
Subscription Shares
Tag-Along Right
Tag-Along Notice
Tax
Transfer
Transferee
Transferor
Valuation
Warranties
Clauses
Interpretation
Investment Terms
Share Subscription
Payment Terms
Conditions Precedent
Completion Obligations
Representations and Warranties
Board Composition
Reserved Matters
Information Rights
Pre-emptive Rights
Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Anti-Dilution Protection
Exit Rights
Covenants
Non-Compete
Confidentiality
Indemnification
Events of Default
Term and Termination
Dispute Resolution
Governing Law
Notices
Assignment
Severability
Entire Agreement
Force Majeure
Amendment
Costs and Expenses
Further Assurance
Relevant Industries

Technology and Software

E-commerce

Manufacturing

Healthcare and Pharmaceuticals

Financial Services

Real Estate

Renewable Energy

Education Technology

Retail and Consumer Goods

Agriculture Technology

Infrastructure

Media and Entertainment

Telecommunications

Biotechnology

Professional Services

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Board of Directors

Executive Leadership

Investment

Strategy

Company Secretarial

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Company Secretary

Investment Manager

Corporate Lawyer

Managing Director

Finance Director

Investment Banker

Private Equity Manager

Venture Capitalist

Legal Counsel

Compliance Officer

Business Development Manager

Strategy Director

Board Member

Investment Analyst

Due Diligence Officer

Industries
Companies Act, 2013: Primary legislation governing company operations, share issuance, shareholder rights, and corporate governance requirements in India
Securities Contracts (Regulation) Act, 1956: Regulates securities trading and transfers, including private placement of shares
SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018: Governs the issuance of securities and necessary disclosures for listed companies
Foreign Exchange Management Act, 1999: Regulates foreign investment in Indian companies and related compliance requirements
Income Tax Act, 1961: Governs taxation aspects of share transfers, capital gains, and other investment-related income
Indian Contract Act, 1872: Provides the basic framework for contract formation and enforcement
Indian Stamp Act, 1899: Governs stamp duty requirements for share transfer and investment agreements
Competition Act, 2002: Relevant for investments that might require competition law clearance based on size and nature of investment
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011: Applicable for investments in listed companies crossing certain thresholds
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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