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Equity Commitment Agreement Template for England and Wales

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Key Requirements PROMPT example:

Equity Commitment Agreement

"I need an Equity Commitment Agreement for a Series B investment round where our PE firm is committing £50 million to a UK tech company, with the investment to be made in three tranches starting March 2025, and we need strong anti-dilution protection."

Document background
The Equity Commitment Agreement is a crucial document in corporate finance transactions under English and Welsh law, typically used when an investor agrees to provide equity funding but the actual investment will occur at a future date. This agreement provides certainty to all parties by legally binding the investor to fulfill their commitment subject to specified conditions. It includes essential details such as investment amount, timing, conditions precedent, and protections for both parties. The document is particularly important in complex transactions where funding certainty is required, such as acquisitions, project finance, or growth capital investments.
Suggested Sections

1. Parties: Identification of the investor and the company/recipient of investment

2. Background: Context of the equity commitment and transaction overview

3. Definitions: Key terms used throughout the agreement

4. Equity Commitment: Core commitment details including amount, timing, and conditions

5. Conditions Precedent: Prerequisites for the commitment to become effective

6. Representations and Warranties: Standard assurances from both parties

7. Closing Mechanics: Process for completing the investment

8. Termination Rights: Circumstances under which the agreement can be terminated

Optional Sections

1. Anti-dilution Provisions: Protection against value dilution, used when requested by investors

2. Tag-along Rights: Right to join in sale of shares, included for minority investor protection

3. Drag-along Rights: Ability to force minority shareholders to join in sale, used for majority control

4. Information Rights: Reporting requirements, included for significant investments

Suggested Schedules

1. Form of Subscription Agreement: Template for formal share subscription

2. Conditions Precedent Checklist: Detailed list of required conditions

3. Corporate Authorities: Evidence of authorization to enter agreement

4. Capitalization Table: Current and post-investment ownership structure

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company law in the UK, covering share capital, allotment provisions, directors' duties, corporate authority requirements, pre-emption rights, and share transfer provisions

Financial Services and Markets Act 2000 (FSMA): Key financial services legislation covering financial promotion restrictions, regulated activities provisions, investment requirements, and prospectus requirements

Financial Services Act 2012: Updates to FSMA provisions and establishes the current financial regulatory framework

The Companies (Model Articles) Regulations 2008: Provides standard articles provisions that might affect share issuance and company constitution

UK Corporate Governance Code: Sets out standards of good practice for listed companies on board composition and development, remuneration, shareholder engagement, and corporate reporting

Law of Property (Miscellaneous Provisions) Act 1989: Fundamental contract law principles governing formal requirements for certain types of contracts and property transactions

FCA Handbook: Comprehensive guide containing regulatory requirements, Listing Rules, and Disclosure and Transparency Rules

Income Tax Act 2007: Tax legislation governing personal income tax implications of equity investments

Corporation Tax Act 2010: Tax legislation governing corporate tax implications of equity investments and share issuances

Enterprise Act 2002: Competition law framework governing merger control and market regulation

Competition Act 1998: Prohibits anti-competitive agreements and abuse of dominant market position

Money Laundering Regulations 2017: Anti-money laundering requirements for business transactions and investments

Proceeds of Crime Act 2002: Legislative framework for dealing with criminal proceeds and money laundering obligations

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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