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Investment And Shareholders Agreement for the United States

Investment And Shareholders Agreement Template for United States

This Investment and Shareholders Agreement is a comprehensive legal document governed by U.S. federal and state securities laws, primarily used in private equity and venture capital transactions. It establishes the terms of investment, shareholders' rights and obligations, corporate governance structure, and exit mechanisms. The agreement must comply with SEC regulations, applicable state 'Blue Sky' laws, and relevant corporate laws, particularly if the company is incorporated in Delaware.

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What is a Investment And Shareholders Agreement?

The Investment And Shareholders Agreement is essential for any private investment transaction in the United States where new investors are entering a company's ownership structure. It protects both investors' and existing shareholders' interests while establishing clear governance frameworks. The document typically includes investment terms, share rights, board composition, transfer restrictions, and exit provisions, all while ensuring compliance with U.S. securities laws and regulations. It's particularly crucial for startups seeking venture capital and established companies undertaking private equity investments.

What sections should be included in a Investment And Shareholders Agreement?

1. Parties: Identifies all parties to the agreement including investors, shareholders, and the company

2. Background: Sets out the context of the investment and parties' intentions

3. Definitions: Defines key terms used throughout the agreement

4. Investment Terms: Details of investment amount, share price, and payment terms

5. Share Rights: Details of share classes and associated rights

6. Board Composition: Structure and appointment rights for board of directors

7. Transfer Restrictions: Limitations on share transfers and right of first refusal provisions

8. Exit Provisions: Terms governing company sale or IPO

What sections are optional to include in a Investment And Shareholders Agreement?

1. Anti-dilution Protection: Protects investors from dilution in future funding rounds - typically included when requested by institutional investors

2. Tag-Along Rights: Allows minority shareholders to join in sale of majority stake - included when protecting minority shareholders

3. Drag-Along Rights: Forces minority shareholders to join in sale of company - included when majority shareholders want exit flexibility

4. Founder Commitments: Specific obligations for founders including non-compete and involvement requirements - included when founders are key to business

What schedules should be included in a Investment And Shareholders Agreement?

1. Cap Table: Current and post-investment shareholding structure

2. Business Plan: Company's strategic plan and financial projections

3. Warranties: Detailed company warranties given to investors

4. Articles of Association: New/amended articles reflecting investment terms

5. Board Resolutions: Resolutions approving the investment

6. Disclosure Letter: Exceptions to warranties given by company

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Clauses

































Industries

Securities Act of 1933: Primary federal legislation governing securities offerings, including registration requirements, exemption provisions (like Regulation D), and disclosure requirements for new securities issuances

Securities Exchange Act of 1934: Federal law establishing ongoing reporting requirements, anti-fraud provisions, and transfer restrictions for publicly traded securities

Investment Company Act of 1940: Federal legislation establishing registration requirements and regulatory framework for investment companies and investment funds

Internal Revenue Code: Federal tax legislation affecting investment structures, including tax implications of investments, treatment of different share classes, and capital gains considerations

State Securities Laws (Blue Sky Laws): State-specific legislation governing securities registration, disclosure requirements, and exemptions that vary by jurisdiction

State Corporate Laws: State-specific laws governing corporate formation and operation, including Delaware General Corporation Law, fiduciary duties, and shareholder rights

SEC Regulation D: Federal regulations governing private placement rules and exemptions from full SEC registration requirements

SEC Regulation S: Federal regulations governing offshore offerings and international securities transactions

SEC Rule 144: Federal regulation governing resale restrictions on securities and requirements for selling restricted securities

JOBS Act: Federal legislation enabling crowdfunding and modified disclosure requirements for certain smaller companies

Sarbanes-Oxley Act: Federal legislation establishing corporate governance requirements, internal controls, and financial reporting standards

Dodd-Frank Act: Federal legislation implementing corporate governance provisions and enhanced disclosure requirements for public companies

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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