Standby Equity Purchase Agreement Template for Malaysia

The Standby Equity Purchase Agreement (SEPA) is a strategic financing instrument used in the Malaysian market when companies need flexible access to capital without immediate dilution. It provides a commitment from investors to purchase newly issued shares at the company's discretion, subject to predetermined conditions and pricing mechanisms. This type of agreement is particularly valuable for growing companies that require assured access to funding while maintaining control over the timing and size of equity issuances. The document must comply with Malaysian regulatory requirements, including the Capital Markets and Services Act 2007, Companies Act 2016, and relevant Securities Commission guidelines. It typically includes detailed provisions on pricing mechanisms, draw-down procedures, conditions precedent, and regulatory compliance measures specific to the Malaysian jurisdiction.

1. Parties: Identification of the company issuing shares and the investor(s) committing to purchase

2. Background: Context of the agreement, including company status and purpose of the standby arrangement

3. Definitions and Interpretation: Key terms, calculation methods, and interpretation rules

4. Purchase Commitment: Core terms of the standby purchase obligation and commitment amount

5. Issuance Mechanics: Procedures for draw-down notices and share issuance

6. Pricing Mechanism: Formula and procedures for determining share price for each issuance

7. Conditions Precedent: Requirements to be met before agreement becomes effective

8. Representations and Warranties: Standard and specific declarations by both parties

9. Covenants: Ongoing obligations of both parties during the agreement term

10. Draw-down Procedures: Detailed process for requesting and executing share purchases

11. Closing Conditions: Requirements for each individual share issuance

12. Term and Termination: Duration of agreement and termination rights

13. Events of Default: Circumstances constituting default and consequences

14. Indemnification: Mutual indemnification obligations and procedures

15. Confidentiality: Protection of confidential information

16. Notices: Communication procedures between parties

17. Governing Law and Jurisdiction: Malaysian law as governing law and dispute resolution provisions

18. General Provisions: Standard boilerplate clauses including amendments, assignments, etc.