Take, for example, the shareholders` agreement model, which defines the conditions governing the rights and obligations of investors and founders as shareholders of the company. Certain provisions of the shareholders` agreement concerning the rights of “Series A shares” should be taken into account in the company`s articles of association, in accordance with the Companies Act. In addition, it is customary to include certain provisions (which are also included in the shareholders` agreement) in the company`s articles of association, which take into account whether or not the Constitution binds a shareholder, whether or not he is a party to a separate agreement, and remedies for violations of the Constitution may go beyond the remedies available under contract law (which, as a general rule, constitute damages as a remedy) In deciding which provisions to include in the Constitution (beyond the legal provisions), it should be taken into account that it will be publicly available on ACRA, while the shareholders` agreement is subject to confidentiality obligations. The exact conditions of a SAFE vary. However, the basic mechanism is that the investor provides specific financing to the company when it is signed. In return, the investor will subsequently receive shares of the company related to certain contractual liquidity events. The primary trigger is usually the sale of preferred shares by the company, typically as part of a future price increase cycle. Unlike a direct share purchase, shares are not valued at the time of signing the SAFE. Instead, investors and the company negotiate the mechanism by which future shares will be issued and postpone the actual valuation. These conditions typically include an entity valuation cap and/or a discount on the valuation of the shares at the time of the triggering event. In this way, the SAFE investor is insequential in the upward trend of the company between the date of signature of the SAFE (and the financing provided) and the trigger. A roadmap is largely non-binding, which the parties want to agree on.
The investor makes the roadmap available at the beginning of the potential investment. This agreement contains provisions such as: expected purchase price, due diligence obligations, closing conditions, confidentiality rights, exclusivity and indemnification rights. Although most term sheets are not binding, exclusivity and confidentiality clauses are generally binding. The Term Sheet formalizes the investor`s offer and offers an additional layer of protection in the event of a dispute. A venture capital investment is a partnership between an investor and a growing company. To create a productive relationship that supports a fast-growing business, the partnership must be good for both the entrepreneur and venture capital. To ensure that the agreement is fair and promotes the interests of both parties, pay particular attention to the roadmap and valuation of your business. Entrepreneurs and investors of companies who are in the early stages of financing, i.e.
before the Series A and Series A funding rounds, can now refer to the Venture Capital Investment Model Agreements (VIMA) that were concluded on 23 October 2018 by the Singapore Academy of Law (“SAL”) and the Singapore Venture Capital and Private Equity Association (SVCA). . . .