After accepting that the investor may have legitimate reasons to request adequate documentation, interested parties should endeavour to ensure that the documentation is prepared and managed in an efficient and cost-effective manner. Legal documentation (according to the author) should be prepared on the basis of fairness and common sense. For example, they could get 10 votes per share while you get one, or they could make a profit of $20 $US until their initial investment is repaid on every $1 you receive. They usually benefit from additional rights that ordinary shareholders do not obtain, such as for example. B protection against dilution and liquidation preference (explained below). Before entering into investment contracts and agreements, it may be useful for you to check the articles and the investment agreement on the link above in order to understand the nature of the agreements to which you may be subject. However, please note that the above documentation is quite detailed and complex and there are a number of less accessible but widely recognized documents (often based on the aforementioned documents) that lawyers can easily access. The version of “dilution protection”, which benefits outside investors the most, is generally referred to as “completely failed”. In this scenario, outside investors can buy additional shares of the company if they are likely to have their share of ownership diluted at the lowest price ever offered. Exclusion of Liability: The purpose of this article is to raise awareness of legal and other issues that may concern business owners and is not designed to provide legal or professional advice. Entrepreneurs should go directly to a suitably qualified professional or a licensed lawyer in their jurisdiction for appropriate legal or professional advice. After the opening night, you will then need to add explanations to the investment agreement. In principle, “pending” statements constitute information about the objective or purpose of each party when carrying out the transaction.
For example, the first statement may indicate that the first party is looking for an investment, and then the second may indicate “then” that the second party is ready to provide the investment. You can also add other “while” statements, if necessary. Then follow Therefore`s instructions.