What is an Ordinary Shares Investment Agreement?
An Ordinary Shares Investment Agreement is a contract for an investor to invest in a company and get ordinary shares in return.
It is crucial that, at an early stage of the discussion, the parties have a good idea of the nature of the investment, as well as the different rights and restrictions that attach and apply to different investment instruments. Always bear in mind that there is not a single universal set of rights or restrictions for investment, and that each provision is a matter of negotiation between the parties. Therefore, it is important for you to understand the differences between various investment instruments, and to choose the method most suited to both your company and the investor’s interests.
In this Ordinary Shares Investment Agreement, we have simplified the language as far as possible to make it user friendly for non-legally trained businesses. We have structured the agreement as follows:
- single investor;
- single completion;
- company being the holding company of a group of companies (if there are multiple companies involved in the business); and
- simple standard warranties.
If you need the following customisation to the document, you may need help from lawyers:
- multiple investors;
- multiple tranches of completion;
- tailor-made warranties to be given to the investor; or
- tailor-made rights and restrictions for ordinary shares.
Key points included
- Details of the subscription, including the price and number of shares to be subscribed for;
- Conditions to be fulfilled before subscription is completed;
- Undertakings of what to do/not to do by the company before completion;
- Things to do at completion;
- Board composition after completion;
- Warranties in respect of various aspects of the business;
- Limitation on warranty claims;
- Basic information of the company; and
- Details of the issued share capital of the company, including any convertible securities or employee share options in place.