Investment and Shareholders Agreement: established business single investor
Combined investment and shareholders agreement for the investment in an established business by a single investor
When use a combined investment and shareholders agreement?
A combined investment and shareholders agreement is likely to be suitable:
- for the first investment in a company by an investor
- where the company does not anticipate future investment rounds involving additional investors
About this Investment and Shareholders Agreement
This document is for the investment by a single investor in an established business carried on through a private limited company. It covers both the investment terms and acts as the shareholders agreement between the investor and the founders of the company going forward.
- subscription: the mechanism and terms for the subscription for shares by the investor
- conditions: conditions to the closing of the investment (if applicable)
- completion: completion of the investment, including the issue of shares to the investor and payment by the investor
- warranties: warranties from the company and, if agreed, the founder shareholders. As the investment is in an established business, the warranties are in relatively full-form to reflect the trading history of the company and its subsidiaries
- limitations on liability: legal limitations on the potential liability under the warranties of the persons who have given the warranties
- director appointment rights:
- investor director: the investor’s right to appoint a director
- other directors: the founder shareholder(s) rights to appoint a director
- board proceedings: how proceedings of the board will be conducted
- future share issues: pre-emption rights on the issue of new shares
- share transfers: process for the transfer of shares, including:
- pre-emption rights on share transfers
- compulsory transfer events, including if a founder ceases to be employed by the company whether as a good or a bad leaver
- tag-along and drag-along rights
- reserved matters: a list of matters requiring the prior approval of the investor and other shareholders
- information rights: rights of the investor and other shareholders to information about the company and its finances
- restrictive covenants: restrictions on the founders in terms of competing with the company and soliciting customers, suppliers and employees of the company
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