Investment Contract For Small Business Template for India

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Key Requirements PROMPT example:

Investment Contract For Small Business

"I need an Investment Contract for Small Business for a 5 crore INR investment into my Delhi-based software development company, with completion planned for March 2025, including standard investor protections and quarterly reporting requirements."

Document background
The Investment Contract For Small Business is a crucial document used when investors seek to inject capital into small business entities in India. It is designed to comply with Indian legislative requirements, including the Companies Act 2013, SEBI regulations, and the MSME Development Act 2006. This agreement is typically used when businesses seek growth capital, whether from institutional investors, venture capital firms, or angel investors. The document covers essential aspects such as investment terms, shareholding structure, investor rights, governance mechanisms, and exit provisions. It provides necessary legal protection for both investors and the business while ensuring alignment with Indian regulatory frameworks and market practices. The contract is particularly relevant for businesses classified under the MSME category seeking professional investment while maintaining operational flexibility.
Suggested Sections

1. Parties: Identifies and provides details of all parties to the agreement, including the company, investors, and any guarantors

2. Background: Sets out the context of the investment and brief description of the business

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Investment Terms: Details the investment amount, valuation, and number/class of shares being issued

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

6. Completion Obligations: Specifies actions required at completion, including document delivery and payment mechanics

7. Representations and Warranties: Statements of fact about the business, made by the company and founders

8. Investor Rights: Details voting rights, board representation, and information rights granted to investors

9. Transfer Restrictions: Restrictions on the transfer of shares and right of first refusal provisions

10. Tag-Along and Drag-Along Rights: Mechanisms for minority shareholders to join in sales or be forced to sell

11. Confidentiality: Obligations regarding confidential information and trade secrets

12. Term and Termination: Duration of the agreement and circumstances allowing for termination

13. Dispute Resolution: Procedures for resolving disputes, including jurisdiction and governing law

14. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

Optional Sections

1. Anti-Dilution Protection: Protects investors from dilution in future funding rounds, used when dealing with sophisticated investors

2. Founder Commitments: Specific obligations of founders including non-compete and full-time commitment, used when founders are key to business success

3. Exit Rights: Specific provisions regarding IPO or sale of the company, included for growth-focused investments

4. Conversion Rights: Terms for converting preferred shares to ordinary shares, used when issuing preferred shares

5. Environmental and Social Compliance: Specific obligations regarding ESG matters, used when investors have ESG requirements

6. Foreign Investment Compliance: Additional provisions for foreign investors to ensure FEMA compliance

Suggested Schedules

1. Schedule 1: Company Information: Detailed corporate information including shareholding structure and capitalization table

2. Schedule 2: Business Plan: Detailed business plan and financial projections

3. Schedule 3: Warranties: Comprehensive list of warranties given by the company and founders

4. Schedule 4: Completion Requirements: Detailed list of documents and actions required at completion

5. Schedule 5: Reserved Matters: List of decisions requiring investor approval

6. Schedule 6: Key Performance Indicators: Specific performance metrics and reporting requirements

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

8. Appendix B: Board Resolution Format: Template 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

Retail

E-commerce

Healthcare

Education

Financial Services

Agriculture

Food and Beverage

Renewable Energy

Professional Services

Logistics

Consumer Goods

Software Development

Biotechnology

Relevant Teams

Legal

Finance

Corporate Development

Investment

Compliance

Risk Management

Business Development

Strategy

Corporate Secretarial

Executive Leadership

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Investment Manager

Legal Counsel

Company Secretary

Business Development Manager

Venture Capital Associate

Investment Analyst

Corporate Lawyer

Managing Director

Finance Director

Compliance Officer

Portfolio Manager

Strategy Director

Risk 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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