Cash Investment in a Company for Shares

November 2015

This month we have added a Share Investment Agreement to our shareholder portfolio of documents.

Many companies from start-up ventures to those at a more mature stage of development may require a cash injection at some stage. This may be to fund a particular project or simply to allow the company to grow at a faster rate than it otherwise would. Private companies may seek to raise this money from family and friends or from a bank via a formal loan. However, a cash injection may also come via interested investors through a cash investment into the company in return for an equity (share) stake in the business.

This Share Investment Agreement 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. The company will issue new shares to the investor with each of the existing shareholders holdings in the company being diluted as a result.

As well as the new Share Investment Agreement template, we have also added new template shareholder resolutions that set out the mechanics of how the company will issue and allot the new shares to the investor in accordance with the terms of the Companies Act 2006.

These new templates will be of interest to all directors and shareholders of small private companies.

We will be adding further investment templates to our Corporate folder of documents in due course.

The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.

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