Seed Investment Agreement (Ordinary Shares)

What is a Seed Investment Agreement (Ordinary Shares)?

A 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.