Document background
The Equity Commitment Letter is a fundamental document in corporate and investment transactions under Dutch law, typically employed when an investor, parent company, or sponsor needs to provide formal assurance of their ability and commitment to fund an equity investment. This document is crucial in M&A transactions, private equity investments, project finance, and corporate restructurings where certainty of funding is essential. The letter sets out the specific amount of equity being committed, conditions for drawing the commitment, and the timeline for funding. Under Dutch law, particular attention must be paid to ensuring the commitment is properly authorized, clearly defined, and enforceable. The document often works in conjunction with other transaction documents such as share purchase agreements, investment agreements, or facility agreements, providing crucial support for the overall transaction structure.
