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Stock Issuance Agreement for Canada

Stock Issuance Agreement Template for Canada

A comprehensive legal agreement governed by Canadian law that documents and formalizes the issuance of shares by a corporation to one or more subscribers. The agreement outlines the terms and conditions of the share issuance, including the number and class of shares, purchase price, representations and warranties of both parties, and various rights and obligations. It ensures compliance with Canadian corporate and securities laws, including the Canada Business Corporations Act and relevant provincial securities legislation, while providing a clear framework for the transaction and protecting the interests of all parties involved.

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What is a Stock Issuance Agreement?

The Stock Issuance Agreement is a crucial document used when a Canadian corporation issues new shares to investors or existing shareholders. This agreement is essential for both private and public companies seeking to raise capital, compensate employees through equity, or restructure their share capital. The document must comply with the Canada Business Corporations Act or relevant provincial legislation, as well as applicable securities laws. It typically includes detailed information about the share issuance, including price, class of shares, rights attached to the shares, representations and warranties, and various conditions precedent to closing. The agreement serves as a legal record of the transaction and helps protect both the issuing corporation and the subscribers by clearly defining their rights and obligations.

What sections should be included in a Stock Issuance Agreement?

1. Parties: Identification of the issuing corporation and the subscriber(s) purchasing the shares

2. Background: Context of the share issuance, including corporate authority and purpose of the issuance

3. Definitions: Key terms used throughout the agreement

4. Share Issuance Details: Specific details of shares being issued including class, number, and price per share

5. Purchase Price and Payment: Terms of payment, including method, timing, and any installment arrangements

6. Closing Conditions: Conditions that must be met before the share issuance can be completed

7. Representations and Warranties of the Corporation: Company's confirmations regarding its authority, share status, and corporate standing

8. Representations and Warranties of the Subscriber: Subscriber's confirmations regarding capacity, investment sophistication, and compliance with securities laws

9. Covenants: Ongoing obligations of both parties

10. Share Rights and Restrictions: Description of rights attached to the shares being issued

11. General Provisions: Standard contract terms including notices, amendments, governing law, etc.

What sections are optional to include in a Stock Issuance Agreement?

1. Pre-emptive Rights: Used when existing shareholders have rights to maintain their proportional ownership

2. Share Transfer Restrictions: Include when there are limitations on how shares can be transferred

3. Board Approval Requirements: Required when share issuance needs specific board approvals or resolutions

4. Registration Rights: Include for private companies planning future public offerings

5. Tag-Along Rights: Used when minority shareholders should have the right to join in sales by majority shareholders

6. Drag-Along Rights: Include when majority shareholders should have the right to force minority shareholders to join in a sale

7. Anti-Dilution Provisions: Used particularly in preferred share issuances to protect against future dilutive issuances

What schedules should be included in a Stock Issuance Agreement?

1. Schedule A - Share Certificate: Form of share certificate to be issued

2. Schedule B - Shareholder Resolution: Copy of the shareholder resolution authorizing the share issuance

3. Schedule C - Board Resolution: Copy of the board resolution approving the share issuance

4. Schedule D - Disclosure Schedule: Detailed disclosures relating to representations and warranties

5. Schedule E - Subscription Form: Form to be completed by subscriber including investment amount and details

6. Appendix 1 - Share Rights and Restrictions: Detailed terms of the share class being issued

7. Appendix 2 - Accredited Investor Certificate: Certificate confirming subscriber's status as an accredited investor if applicable

Authors

Alex Denne

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

Jurisdiction

Canada

Publisher

Ƶ

Document Type

Stock Agreement

Cost

Free to use
Relevant legal definitions




























Clauses



























Relevant Industries

Technology

Manufacturing

Financial Services

Healthcare

Real Estate

Energy

Mining

Consumer Goods

Professional Services

Telecommunications

Biotechnology

Agriculture

Transportation

Entertainment

Education

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Executive Leadership

Board of Directors

Corporate Secretariat

Investment

Treasury

Governance

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

General Counsel

Legal Director

Investment Manager

Corporate Lawyer

Securities Lawyer

Compliance Officer

Board Director

Corporate Development Manager

Finance Director

Investment Banker

Venture Capital Manager

Private Equity Manager

Industries






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