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Shareholder Investment Agreement Template for Pakistan

A comprehensive legal agreement governed by Pakistani law that establishes the terms and conditions of an investment in a company through share subscription. This document outlines the rights and obligations of investors, existing shareholders, and the company, including investment amounts, share allocation, management rights, exit provisions, and protective provisions. It incorporates requirements from the Companies Act 2017 and other relevant Pakistani legislation, while potentially addressing Shariah compliance aspects where necessary. The agreement serves as the primary document governing the relationship between shareholders and protecting their respective interests in the company.

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What is a Shareholder Investment Agreement?

The Shareholder Investment Agreement is a crucial document used when a company is seeking new investment while establishing clear terms for shareholder relationships. This agreement is particularly important in the Pakistani business context, where it must comply with the Companies Act 2017 and other relevant local legislation. It is typically used during funding rounds, strategic investments, or when bringing in new shareholders, providing a comprehensive framework for the investment relationship. The document covers essential aspects such as investment terms, shareholder rights, governance structure, exit mechanisms, and protective provisions. It must be carefully drafted to ensure enforceability under Pakistani law while meeting both local and international business standards. The agreement often needs to consider Shariah compliance aspects and specific requirements for foreign investments when applicable.

What sections should be included in a Shareholder Investment Agreement?

1. Parties: Identification of all parties to the agreement including the Company, existing shareholders, and new investor(s)

2. Background: Context of the investment, company's business, and purpose of the agreement

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Investment Terms: Details of the investment amount, share class, valuation, and payment terms

5. Completion: Conditions precedent, completion mechanics, and timing of the investment

6. Warranties and Representations: Warranties from the company, existing shareholders, and new investors

7. Management and Control: Board composition, management structure, and decision-making processes

8. Reserved Matters: Actions requiring special approval from investors or specific shareholder groups

9. Share Transfer Restrictions: Limitations on transfer of shares and procedural requirements

10. Pre-emptive Rights: Rights of first refusal on new share issuances

11. Tag and Drag Rights: Co-sale rights and forced sale provisions

12. Exit Rights: Provisions regarding IPO, strategic sale, and other exit mechanisms

13. Information Rights: Investor information and inspection rights

14. Confidentiality: Protection of confidential information and trade secrets

15. Term and Termination: Duration of the agreement and termination provisions

16. General Provisions: Standard boilerplate clauses including notices, governing law, and dispute resolution

What sections are optional to include in a Shareholder Investment Agreement?

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

2. Shariah Compliance: Specific provisions ensuring compliance with Islamic law, included when required by investors or company policy

3. Employee Stock Option Pool: Provisions for employee share schemes, included when company plans to implement ESOP

4. Non-compete and Non-solicitation: Restrictions on competitive activities, included for key shareholders

5. Founder Commitments: Specific obligations for founders, included when founders remain active in business

6. Foreign Investment Provisions: Special provisions for foreign investors' compliance with Pakistani laws, included with foreign investors

7. Put Option Rights: Rights to force company/other shareholders to buy shares, included for minority protection

8. Strategic Rights: Special rights for strategic investors, included when strategic partner is investing

What schedules should be included in a Shareholder Investment Agreement?

1. Schedule 1: Company Information: Details of company registration, share capital, and existing shareholders

2. Schedule 2: Subscription Details: Detailed breakdown of investment amount, share numbers, and pricing

3. Schedule 3: Warranties: Comprehensive list of warranties given by the company and existing shareholders

4. Schedule 4: Reserved Matters: Detailed list of actions requiring special approval

5. Schedule 5: Completion Requirements: Checklist of documents and actions required for completion

6. Schedule 6: Board Conduct: Procedures for board meetings and decision-making

7. Schedule 7: Business Plan: Company's business plan and financial projections

8. Appendix A: Share Capital Table: Pre and post-investment shareholding structure

9. Appendix B: Form of Deed of Adherence: Template for new shareholders joining the agreement

Authors

Alex Denne

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

Jurisdiction

Pakistan

Publisher

Genie AI

Cost

Free to use

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