Model documents for early stage investments
The BVCA Venture Committee and the Legal & Technical Committee working with leading Venture Capital investors and the legal community in the UK have designed more standardised documents for use in early stage investments. These documents are not suitable for seed investment.
2014 consultation on amendments to model documents
Investors and entrepreneurs in the United States have long benefited from standardized venture capital documents that save time and money and ensure they can see and settle the key issues in each deal against a familiar background of common legal terms. In the United Kingdom, the industry continues to suffer from lack of such standardization.
The BVCA is working to solve this, by:
- campaigning to encourage use of standard documents throughout the industry; and
- making well-crafted, up to date, templates available to all entrepreneurs, investors and lawyers
The first phase of this project – producing the templates – is nearing completion. For the past year, the BVCA and over a dozen committed experts have been updating and simplifying the BVCA’s existing template suite (first produced in 2006 and updated in 2010) to make it as attractive and versatile as possible.
To complete the first phase, we are inviting interested parties (whether entrepreneurs, angel investors, venture capital firms, corporate venture capital investors, advisors or otherwise), to get involved by reviewing the documents and sharing their wisdom and insights to make them even better, clearer and more flexible.
The documents now being shared are not quite in final form – we are seeking Counsel’s opinion on whether the model agreement should be signed as a deed or under hand. At a later date we also aim to provide a variant template in which the subscription and shareholders’ agreements have been separated. Alongside this consultation the BVCA will also publish a briefing that will assist members in understanding the implications of current accounting standards on the classification of preferred shares (as either debt or equity).
We intend to:
- collate all input received from consultation over this month with 28 February being our deadline for initial feedback;
- hold a seminar on 6 March 2014 from 2pm-4pm at Taylor Wessing to allow discussion, feedback and queries;
- publish the templates formally in September 2014 (We are currently seeking Counsel’s opinion on whether the model agreement should be signed as a deed or under hand.);
- combine this with a publicity campaign to ensure the widest possible take-up of the documents (your ideas on achieving this are very welcome); and
- ensure continuous improvement in the documents, by holding regular review and update sessions thereafter.
If you are interested in submitting feedback and/or attending the seminar, or if you have ideas on how best to ensure the widest possible take-up of these documents by the venture community, please contact Gurpreet Manku (firstname.lastname@example.org).
BVCA Model Subscription and Shareholders’ Agreement – clean version
BVCA Model Subscription and Shareholders’ Agreement – compared to 2010 document
BVCA Model Articles of Association – clean version
BVCA Model Articles of Association – compared to 2010 document
Produced 2006 and updated June 2010.
LEGAL DISCLAIMER: THESE DOCUMENTS ARE INTENDED TO SERVE AS STARTING POINT ONLY AND SHOULD BE TAILORED TO MEET YOUR SPECIFIC LEGAL AND COMMERCIAL REQUIREMENTS. NONE OF THE DOCUMENTS SHOULD BE CONSTRUED AS LEGAL ADVICE FOR ANY PARTICULAR FACTS OR CIRCUMSTANCES.
CLASSIFICATION OF SHARES: ACCOUNTING STANDARDS (INCLUDING INTERNATIONAL AND UK ACCOUNTING STANDARDS) ESTABLISH PRINCIPLES FOR PRESENTING FINANCIAL INSTRUMENTS AS LIABILITIES OR EQUITY. FIRMS SHOULD REVIEW THE TERMS AND RIGHTS ATTACHED TO SHARES (AND IN PARTICULAR PREFERRED SHARES) TO DETERMINE THE CLASSIFICATION AND PRESENTATION OF THESE INSTRUMENTS IN THE FINANCIAL STATEMENTS OF A COMPANY. DEPENDING ON THE FACTS OR CIRCUMSTANCES, CERTAIN TYPES OF SHARES COULD BE CLASSED AS DEBT UNDER ACCOUNTING STANDARDS.
The BVCA would be interested in your views on this documentation. Should you wish to contact the BVCA, please email email@example.com.
BVCA Term Sheet
BVCA Model Subscription and Shareholders Agreement
BVCA Subscription and Shareholders' Agreement - drafting notes
BVCA Articles of Association
BVCA Articles of Association - drafting notes