Anti-dilution ratchet provisions—articles—non-leveraged investment
Anti-dilution ratchet provisions—articles—non-leveraged investment

The following Corporate precedent provides comprehensive and up to date legal information covering:

  • Anti-dilution ratchet provisions—articles—non-leveraged investment

Add new Article 14 as follows:

14. Anti-dilution

14.1 In this Article 14, unless the context otherwise requires the following expressions shall have the following meanings:

New Securities means any Shares or other securities convertible into, or carrying the right to subscribe for Shares, issued by the Company after the date of adoption of these Articles.

14.2 If the Company issues any New Securities at a price per Share less than the Issue Price of the Preferred Shares (Qualifying Issue), the Company shall, subject to Article 14.6, make a bonus issue of such number of [Ordinary OR Preferred] Shares (Anti-Dilution Shares) to each holder for the time being of Preferred Shares (Exercising Investors) calculated as follows (rounding down to the nearest whole Share):

[[Full Ratchet]

ADS = (TP / P) – N

Where:

ADS = the number of Anti-Dilution Shares;

TP = the total amount subscribed (whether in cash or by way of conversion of loan) by such Exercising Investor for his Preferred Shares prior to the Qualifying Issue;

P = the lowest price at which each New Security is to be issued (which in the event that the New Security is not issued for cash shall be the sum certified by the Company’s auditors (from time to time) acting as experts and not arbitrators as being in their opinion the current cash value of the non cash consideration for the allotment of the

New Security);

N = the number of Preferred Shares held by such Exercising Investor prior to the Qualifying Issue.

OR

[Narrow-Based Weighted Average Ratchet]

ADS = (TP / WAP) – N

Where:

ADS = the number of Anti-Dilution Shares;

TP = the total amount subscribed (whether in cash or by way of conversion of loan) by such Exercising Investor for their Preferred Shares prior to the Qualifying Issue;

WAP = the weighted average price per Share held by the Exercising Investors as calculated by the following formula:

WAP = (TP + M) / (B + Y)

TP = the total amount subscribed (whether in cash or by way of conversion of loan) by all such Exercising Investors for Preferred Shares;

M = the aggregate of amounts to be paid in respect of the New Securities to be issued pursuant to the Qualifying Issue and the aggregate of amounts paid in respect of all previous Qualifying Issues (if any) (which in the event that the New Securities or Shares in respect of Qualifying Issues are not issued for cash shall be the sum certified by the Company’s auditors (from time to time) acting as experts and not arbitrators as being in their opinion the current cash value of the non cash consideration for the allotment of the New Securities or Shares in respect of a Qualifying Issue);

B = the aggregate number of Preferred Shares held by all Exercising Investors prior to the Qualifying Issue;

Y = the aggregate number of New Securities to be issued and the aggregate number of Shares issued in respect of all previous Qualifying Issues (if any);

N = the number of Preferred Shares held by the relevant Exercising Investor prior to the Qualifying Issue.

OR

[Broad-Based Weighted Average Ratchet]

ADS = ((IP / WAP) x N) – N

Where:

ADS = Number of Anti-Dilution Shares to be issued to the Exercising Investor

WAP = the weighted average price per share held by the Exercising Investors as calculated by the following formula:

WAP = (IP x ESC) + (QIP x NS) / (ESC + NS)

IP = Issue Price of the Preferred Shares (as adjusted in accordance with Article 14.5);

ESC = the number of Shares in issue plus the aggregate number of Shares in respect of which options to subscribe have been granted, or which are subject to convertible securities (including but not limited to warrants) in each case immediately prior to the Qualifying Issue;

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