What is a Term Sheet (Ordinary Shares)?
A Term Sheet (Ordinary Shares) is a simple, non-legally binding document that records the major terms of negotiation between a company and investors for the issue of new ordinary shares.
Creating a Term Sheet (Ordinary Shares) helps facilitate discussion between the company and its investors in the negotiation stage.
Given the non-legally binding nature of a Term Sheet (Ordinary Shares), it is necessary for the parties to execute an Ordinary Shares Investment Agreement to record the binding terms in full.
Key points included
- Basic information about the company;
- Identity of the founders;
- Subscription price for new shares;
- Details of new shares to be issued to investors;
- Estimated completion date;
- Investors’ rights;
- Obligations on the founders;
- Whether or not the company will set up a share option pool for its employees;
- Confidentiality of the terms discussed; and
- Whether or not the discussion will be exclusive, and if so how long is the exclusivity period.