Legal Documents

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.

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