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Standby Equity Purchase Agreement

Standby Equity Purchase Agreement Template for India

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Key Requirements PROMPT example:

Standby Equity Purchase Agreement

"I need a Standby Equity Purchase Agreement for my Mumbai-based technology startup, where a Singapore-based venture capital firm will commit to purchasing up to INR 50 crore of equity shares over 18 months starting January 2025, with quarterly draw-down options."

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Document background
The Standby Equity Purchase Agreement (SEPA) serves as a crucial financing tool in the Indian corporate landscape, providing companies with a flexible funding mechanism while ensuring compliance with Indian regulatory requirements. This agreement is particularly valuable for companies seeking alternative funding sources or requiring periodic capital infusions without the immediate dilution of equity. The document typically includes comprehensive details about purchase commitments, pricing mechanisms, draw-down procedures, and regulatory compliance requirements under Indian law, particularly adhering to SEBI guidelines and the Companies Act 2013. It's commonly used by growing companies that need assured access to capital while maintaining control over the timing and amount of equity issuance, making it particularly relevant in sectors with variable capital requirements or growth-oriented business models.
Suggested Sections

1. Parties: Identification of the company issuing shares and the investor/purchaser

2. Background: Recitals explaining the context and purpose of the agreement

3. Definitions: Definitions of key terms used throughout the agreement

4. Purchase Commitment: Core terms of the standby purchase arrangement including commitment amount and duration

5. Draw Down Mechanics: Detailed procedures for initiating and completing each draw down request

6. Pricing Mechanism: Formula and methodology for determining the purchase price of shares

7. Conditions Precedent: Conditions that must be satisfied before the agreement becomes effective

8. Conditions to Draw Down: Specific conditions that must be met for each draw down request

9. Representations and Warranties: Statements of fact and assurances from both parties

10. Company Covenants: Ongoing obligations of the company during the agreement term

11. Investor Covenants: Ongoing obligations of the investor during the agreement term

12. Events of Default: Circumstances constituting default and consequences

13. Termination Rights: Circumstances under which either party may terminate the agreement

14. Confidentiality: Provisions regarding confidential information and its protection

15. Notices: Process and requirements for formal communications between parties

16. Governing Law and Jurisdiction: Applicable law and jurisdiction for dispute resolution

17. General Provisions: Standard boilerplate clauses including assignment, amendments, and severability

Optional Sections

1. Foreign Investment Compliance: Required when the investor is a foreign entity, detailing compliance with FEMA and RBI regulations

2. Multiple Tranches: Used when the purchase commitment is structured in multiple tranches with different conditions

3. Tag-Along Rights: Optional protection for minority shareholders in case of stake sale

4. Anti-Dilution Protection: Protection for investor against future dilution of shareholding

5. Registration Rights: Rights of the investor regarding registration of shares for public trading

6. Board Nomination Rights: Rights of the investor to nominate board members based on shareholding

7. Information Rights: Special rights for accessing company information beyond statutory requirements

8. Exit Rights: Specific mechanisms for investor exit beyond standard termination

Suggested Schedules

1. Draw Down Notice Form: Template form for initiating draw down requests

2. Pricing Certificate: Template for documenting price calculation for each draw down

3. Compliance Certificate: Form for certifying compliance with conditions precedent and draw down conditions

4. Company Corporate Documents: List of relevant corporate authorizations and documents

5. Investor KYC Documents: Required KYC and regulatory compliance documents

6. Calculation Methods: Detailed methodology for various calculations under the agreement

7. Existing Shareholders Agreement: Summary or reference to existing shareholders' rights and obligations

8. Share Capital Structure: Current and projected share capital structure of the company

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions

















































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Relevant Industries

Technology

Manufacturing

Pharmaceuticals

Real Estate

Infrastructure

Renewable Energy

E-commerce

Financial Services

Healthcare

Telecommunications

Consumer Goods

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Development

Treasury

Compliance

Corporate Secretarial

Risk Management

Investment

Board of Directors

Executive Management

Relevant Roles

Chief Financial Officer

Chief Executive Officer

Corporate Finance Manager

Legal Counsel

Company Secretary

Investment Manager

Finance Director

Corporate Development Manager

Treasury Manager

Compliance Officer

Board Director

Investment Banker

Private Equity Manager

General Counsel

Financial Controller

Industries









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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