Investment and Shareholders Agreement: start-up business multiple investors
A Combined investment and shareholders agreement for the investment in a start-up business by multiple investors.
Background
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 investors who are not themselves the founder shareholders of the business
- 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 more than one investors in a start-up private limited company. It covers both the investment terms and acts as the shareholders agreement between the investors and the founders of the company going forward.
Rights of the investors are exercisable by a majority of the investors.
Document features
- subscription: the mechanism and terms for the subscription for shares by the investors
- completion: completion of the investment, including the issue of shares to the investors and payment by the investors
- warranties: warranties from the company and each founder. As the investment is in a start-up company, the warranties reflect the limited trading history of the company
- limitations on liability: legal limitations on the potential liability under the warranties of the company and the founders
- investor director: the investors’ right 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 majority
- information rights: rights of the investors 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
Explanatory guidance
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