Overview of a Seed Investment Agreement (Ordinary Shares)

What is a Seed Investment Agreement (Ordinary Shares)?

Seed Investment Agreement (Ordinary Shares) is a contract by which a company raises funds by issuing new ordinary shares to new investors.

A Seed Investment Agreement (Ordinary Shares) is used for investment by ordinary shares only. Raising funds by a Seed Investment Agreement (Ordinary Shares) is simple and direct.

After completion of investment under a Seed Investment Agreement (Ordinary Shares), the new investors have the same class of shares (ordinary) as the founders and therefore have equal rights.

Key points included

  • Basic information about the company;
  • Existing shareholding of the founders;
  • Subscription price;
  • Number of new shares to be issued to investors;
  • Completion date;
  • Investors’ rights;
  • Obligations on the founders;
  • Whether or not the company will set up a share option pool for its employees;
  • Warranties to be given by the company; and
  • Limitation on liabilities for untrue warranties.

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