Raising capital is essential to the development and expansion of your business, but it is also an area subject to considerable regulation in Australia. Having the right legal documents and guidance to raise capital for your business ensures investor confidence and is a helpful way of avoiding disputes down the track.
If you are looking for investors to invest in your business, you must be equipped with the right legal documents. For access to all the documents you need when raising capital for your business, sign up to Lawpath today.
What Legal Documents Do I Need to Raise Capital?
Term Sheet
A term sheet is a precursor document used during the negotiation stages to establish the general terms of an investor providing capital to your business. It should include any important proposal points relating to raising capital and key provisions to be included in the shareholders and subscription agreements, before you proceed with it. While it is not a legally binding document, except for a few clauses like confidentiality and exclusivity, it is a good way to document the proposed terms before entering into a legally binding contract.
Shareholders Agreement
The shareholders agreement forms an important legal foundation for your business, to help ensure all investors are on the same page from the onset of the venture. The agreement sets out the intentions, rights and responsibilities of each shareholder. It is also a helpful way of avoiding disputes between parties. With a shareholders agreement in place, your shareholders will have a clear understanding that their investment in the company is determined by the number of shares they own and not by any pre-agreement promises.
Subscription Agreement
A subscription agreement is a promise by your business to sell a certain number of shares at a certain price and a promise by a subscriber to buy the shares at that price. Investors like certainty and a subscription agreement provides investors with terms of purchase that cannot be changed. As a business, it is a guarantee that investors will pay the fixed price that has been agreed to.
Hire a Startup Lawyer
Regardless of which capital raising structure you’re looking to undertake, it’s essential to have a lawyer involved throughout the process to ensure your best interests are secured. A startup lawyer knows the right questions to ask to ensure your business avoids any legal hassles from the get-go.
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What’s Next?
Putting in place the right legal documents will not only protect your interests but also enhance your business’s value and reputation. For access to all these documents, sign up to LawPath today.
LawPath provides access to all the legal documents you will need when raising capital for your business. Contact a LawPath consultant on 1800 529 728 to learn more about customising legal documents, obtaining a fixed-fee quote from our largest online network of expert lawyers or to get answers to your legal questions.
