Investment Agreement – Investment in Return for Shares in a Company

Share Investment Agreement (Cash)

CO.SI.01

This agreement is a classic investment agreement where the existing shareholders in a company (who will also often be the original founders of the company), enter into an agreement with an investor who invests money in the company in return for shares in the company. This is an alternative method of funding for a company instead of seeking a bank or private loan.

This Share Investment Agreement (Cash) records the terms on which the investor will make his/her investment in the company as well as regulate the on-going relationship between the investor and the existing shareholders.

This is a short form agreement which assumes that all the existing shareholders are also directors of the business and importantly that they will continue to hold shares in the company going forward. This distinguishes it from a share sale and purchase agreement where all the shares in the company are being purchased and the original shareholders are exiting the business. However, note that in issuing new shares to an investor, each of the existing shareholders will be diluting their shareholding in the company. The resolutions set out in Schedule 6 of the Share Investment Agreement deal with the procedural mechanics of this.

This agreement includes the following clauses: 

1. Definitions & Interpretation

2. Conditions

3. Investment & Completion

4. Investor director

5. Warranties

6. Business plan

7. Matters requiring consent

8. Transfer of shares

9. Non-compete

10. Confidentiality

11. Assignment

12. Rights of third parties

13. Conflicts with Articles

14. Entire agreement

15. Notices

16. Counterparts

17. No partnership

18. Miscellaneous

19. Governing law & jurisdiction

 

And the following schedules: 

• Schedule 1 The Existing Shareholders

• Schedule 2 The Investor

• Schedule 3 Particulars of the Company

• Schedule 4 Articles of Association

• Schedule 5 Conditions

• Schedule 6 Resolutions

• Schedule 7 Warranties

• Schedule 8 Consents

This document is in open format. Fields should be completed and wording in square brackets is optional and can be deleted or retained according to requirements.

Once you have subscribed to the Corporate Document Folder click on the “Download Document” button below. You will be asked what you want to do with the file. It is recommended that you save the document to a location of your choice prior to viewing.

Top