Can a royalty agreement be used as equity?
Ontario, Canada
The following excerpt is from Hybrid Financial Ltd. v. Flow Capital Corp., 2022 ONSC 892 (CanLII):
As noted in Bimman v. Neiman, 2015 ONSC 2313, 41 B.L.R. (5th) 95, at para. 205, aff’d 2017 ONCA 264, a fundamental feature of equity investments is the risk that investors take that they may not receive any return on their capital investment and may lose the capital itself. In this way, equity investors share in both the risk and profit of an enterprise. In this case, at para. 205, the court recognized that equity can take the form of a royalty agreement.
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