Document background
The Equity Funding Agreement serves as the primary transaction document for equity investments in South African companies, whether from local or international investors. It is typically used when a company seeks growth capital, strategic investment, or expansion funding in exchange for shares. The agreement must comply with South African legislative requirements, including the Companies Act, Financial Markets Act, and where applicable, B-BBEE legislation and exchange control regulations. This document captures all essential elements of the investment, including valuation, share class rights, governance provisions, warranties, and investor protections. It's particularly important in the South African context to address specific local requirements while maintaining international investment standards and practices. The agreement forms the foundation of the ongoing relationship between the investor(s) and the company, setting out clear rights, obligations, and procedures for future corporate actions.
