Capital Raising Agreement Template for India

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Key Requirements PROMPT example:

Capital Raising Agreement

"Need a Capital Raising Agreement for my AI startup to raise Series A funding of USD 5 million from a US-based venture capital firm, with specific provisions for IP protection and multiple closure rounds planned for March 2025."

Document background
The Capital Raising Agreement serves as the primary legal document for companies seeking to raise funds through equity or debt investment in India. It is essential for both early-stage and established companies looking to secure growth capital, expansion funding, or strategic investment. The agreement must comply with Indian regulatory requirements, including the Companies Act, 2013, SEBI regulations, and FEMA guidelines for foreign investments. It typically includes detailed provisions on investment terms, shareholder rights, corporate governance, and exit mechanisms. The document is crucial for protecting the interests of both the company and its investors while ensuring transparent and compliant capital raising processes. This agreement type is particularly relevant in the current Indian market context, where companies increasingly seek private capital for growth and expansion.
Suggested Sections

1. Parties: Identification of all parties to the agreement including the company, investors, and any other relevant stakeholders

2. Background: Context of the transaction, including company information and purpose of the capital raising

3. Definitions: Comprehensive list of defined terms used throughout the agreement

4. Investment Terms: Details of the investment amount, valuation, and type of securities being issued

5. Conditions Precedent: Conditions that must be satisfied before the investment is made

6. Closing Mechanics: Process and requirements for completing the investment transaction

7. Representations and Warranties: Statements of fact and assurances from both the company and investors

8. Covenants: Ongoing obligations and commitments of the parties

9. Information Rights: Investors' rights to receive financial and other company information

10. Board Composition: Structure and composition of the board of directors

11. Transfer Restrictions: Limitations on the transfer of securities

12. Exit Rights: Provisions regarding company sale, IPO, or other exit opportunities

13. Termination: Circumstances under which the agreement can be terminated

14. Governing Law and Jurisdiction: Applicable law and dispute resolution mechanisms

15. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability

Optional Sections

1. Anti-Dilution Protection: Protection for investors against future down rounds, included when specifically negotiated

2. Tag-Along Rights: Right of investors to join in sale of shares by promoters, included for minority investor protection

3. Drag-Along Rights: Right to force minority shareholders to join in sale, included when majority investors require exit flexibility

4. Liquidation Preference: Priority rights in case of liquidation, included for preferred shareholders

5. Multiple Closing Provisions: Included when the investment is structured in multiple tranches

6. ESOP Provisions: Included when the company has or plans to implement an employee stock option plan

7. Foreign Investment Compliance: Included when there are foreign investors to ensure FEMA compliance

8. Strategic Rights: Special rights for strategic investors, included when strategic investors are involved

Suggested Schedules

1. Schedule 1 - Capitalization Table: Pre and post-investment shareholding pattern of the company

2. Schedule 2 - Disclosure Schedule: Exceptions to representations and warranties

3. Schedule 3 - List of Founders: Details of founders including shareholding and roles

4. Schedule 4 - Conditions Precedent Checklist: Detailed list of conditions to be satisfied before closing

5. Schedule 5 - Reserved Matters: List of actions requiring investor approval

6. Schedule 6 - Closing Checklist: Documents and actions required for closing

7. Appendix A - Form of Share Certificate: Template for share certificates to be issued

8. Appendix B - Compliance Certificates: Templates for various compliance certificates

9. Appendix C - Board Resolution Templates: Standard format for required board resolutions

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

Relevant legal definitions
Clauses
Relevant Industries

Technology

Manufacturing

Financial Services

Healthcare

Real Estate

Infrastructure

E-commerce

Consumer Goods

Renewable Energy

Education

Telecommunications

Biotechnology

Agriculture

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Board of Directors

Executive Leadership

Investment

Corporate Secretarial

Risk Management

Strategy

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Company Secretary

Investment Banker

Private Equity Manager

Venture Capital Partner

Corporate Lawyer

Financial Controller

Board Director

Managing Director

Investment Manager

Compliance Officer

Strategic Planning Director

Business Development Manager

Industries
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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