Overview of a Seed Investment Agreement (Ordinary Shares)
What is a Seed Investment Agreement (Ordinary Shares)?
AÂ 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.
