Useful tips from a lawyer for startups for allocating shares to an investor.
After talks with a potential investor for your startup, they may give you a term sheet or memorandum of understanding (MOU) including the key terms for investment.
At this point, it is a good idea to get your own accounting and legal advice for your startup.
In this article we cover legal tips for allocating shares to an investor.
This document will have the key terms for the investment in your startup and these terms may include:
The legal agreements will include a share sale agreement and a shareholder agreement.
A lawyer can help you ensure that the key terms in the term sheet or MOU are built into your legal documents.
The share sale agreement will outline the terms for the sale including:
The shareholder agreement outlines the rights and responsibilities of shareholders and includes:
A lawyer can help you review your term sheet, shareholder and share sale agreement and advise you of any harsh terms. Harsh terms may include:
You will need to register the share sale with ASIC and you can find out more about this step here.
Finally, we have a special bonus for our readers - the templates that you will need to complete the share registration process. You can download your complimentary templates below.