Standby Equity Purchase Agreement Template for South Africa

The Standby Equity Purchase Agreement (SEPA) is a strategic financing tool used by companies seeking flexible access to equity capital in the South African market. This document is particularly valuable for growing companies that require assured access to future funding while maintaining control over the timing and size of equity issuances. The agreement is structured to comply with South African corporate and securities laws, including the Companies Act 71 of 2008 and Financial Markets Act 19 of 2012. It typically includes detailed provisions for draw-down mechanics, pricing methodologies, regulatory compliance requirements, and investor protections. SEPAs are commonly used in scenarios where companies anticipate future capital needs but prefer having discretion over when and how much equity to issue, making them particularly useful for expansion projects, research and development funding, or general working capital purposes.

1. Parties: Identification of the issuing company and the investor

2. Background: Context of the agreement and general commercial intent

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

4. Purchase Commitment: Core obligation of the investor to purchase shares under specified conditions

5. Commitment Period: Duration of the agreement and any extension provisions

6. Draw-down Mechanics: Process and conditions for initiating and completing share purchases

7. Pricing Mechanism: Formula and methodology for determining share purchase price

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

9. Representations and Warranties: Standard and specific assurances from both parties

10. Company Undertakings: Ongoing obligations of the company during the commitment period

11. Investor Undertakings: Ongoing obligations of the investor during the commitment period

12. Events of Default: Circumstances constituting breach and their consequences

13. Termination: Grounds and process for ending the agreement

14. Confidentiality: Protection of confidential information and announcements

15. Notices: Communication procedures between parties

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