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Contracts & Transactions

Fundraising & Investment Documentation

The terms that decide control deserve the same attention as the valuation.

The Problem

What Is at Stake

Founders often negotiate valuation carefully and the terms that decide control much less carefully. A term sheet is usually described as non-binding, but its commercial terms almost always carry through into the shareholders’ agreement. Board seats, veto rights, anti-dilution protection, liquidation preference and exit rights shape how the company is run long after the money has been spent.

Investors face the mirror image of this problem. Rights that look strong on paper can be difficult to rely on if the agreement, the articles of association and the corporate approvals are not aligned with the Companies Act, 2013 and, for foreign investment, with FEMA.

KP Juris advises companies and founders on the documentation and structure of an investment round and on readiness for due diligence. The firm does not introduce investors or advise on whether to make an investment.

Scope

Matters We Advise On

  1. Term sheet review and negotiation support
  2. Shareholders' and subscription agreements
  3. Investor rights: board seats, vetoes, anti-dilution and exits
  4. Choice of instrument: equity, CCPS or CCD
  5. Documentation readiness and data rooms
  6. Promoter and founder arrangements, including vesting
  7. Convertible instruments and bridge rounds
  8. Coordination of post-round filings with company secretaries and chartered accountants

Approach

How We Approach It

  1. 01

    Read the term sheet for control

    Identify every term that affects board composition, decision-making and exit, and explain its practical effect.

  2. 02

    Prioritise the asks

    Separate market-standard terms from those worth negotiating, given the company's stage and the investor.

  3. 03

    Carry terms into the documents

    Check that the shareholders' agreement, articles and resolutions reflect what was agreed, and nothing more.

  4. 04

    Prepare for closing

    Organise the data room, disclosures and approvals, and coordinate filings with the company's secretarial and accounting advisers.

Key Considerations

What to Know Before You Act

Control versus economics

A higher valuation with broad investor vetoes can leave founders with less practical control than a lower valuation with narrow ones.

Drag-along and tag-along

Drag-along rights let a majority require others to join a sale; tag-along rights let a minority join one. Thresholds and price protections decide whose exit they really serve.

Founder vesting

Investors may ask founders to re-vest existing shares. Acceleration on a sale, or on termination without cause, should be negotiated at the same time.

Filings after the round

Share allotments under the Companies Act, 2013 and, for foreign investment, reporting under FEMA have their own timelines. These are completed with company secretaries and chartered accountants.

Related

Related Services and Insights

Commercial Contracts

Supply, service and distribution agreements, reviewed before signing.

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Engagements are scoped to the matter. Please do not send confidential documents with a first enquiry.

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