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Investment Framework Agreement

Investment Framework Agreement Template for India

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Key Requirements PROMPT example:

Investment Framework Agreement

"Need to draft an Investment Framework Agreement for a US-based venture capital firm planning to invest USD 50 million in multiple tranches into our Indian technology startup, with the first investment planned for March 2025; must include FEMA compliance provisions and specific protections for intellectual property rights."

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Document background
The Investment Framework Agreement is a sophisticated legal instrument used in the Indian market to establish the overarching terms and conditions for investment relationships. This document is particularly relevant when investors plan to make multiple investments or staged investments in a target company over time. It provides the foundational framework for the investment relationship while allowing flexibility for specific terms to be determined in subsequent transaction documents. The agreement must comply with Indian regulatory requirements, including foreign investment regulations, securities laws, and corporate governance norms. It typically includes detailed provisions on investment structure, governance rights, information rights, exit mechanisms, and regulatory compliance requirements. The document is especially crucial in cross-border investments into India, where regulatory compliance and investment protection mechanisms need careful consideration.
Suggested Sections

1. Parties: Identifies and provides details of the parties entering into the agreement, including their legal status and registered addresses

2. Background: Sets out the context and purpose of the agreement, including the parties' intentions and basic premises

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

4. Investment Structure: Details the proposed investment mechanism, including investment stages, amounts, and timelines

5. Conditions Precedent: Specifies conditions that must be satisfied before the investment obligations become effective

6. Investment Process: Outlines the procedures and mechanisms for making investments, including funding calls and closing mechanics

7. Representations and Warranties: Contains statements of fact and assurances from each party

8. Covenants: Details ongoing obligations of the parties throughout the investment period

9. Governance Rights: Specifies investor rights in company management and decision-making

10. Information Rights: Establishes reporting requirements and investor access to information

11. Exit Rights: Details mechanisms for investor exit, including put options, drag-along, and tag-along rights

12. Term and Termination: Specifies agreement duration and circumstances for termination

13. Confidentiality: Governs the treatment of confidential information exchanged under the agreement

14. Dispute Resolution: Establishes mechanisms for resolving disputes between parties

15. General Provisions: Contains standard boilerplate clauses including notices, amendments, and governing law

Optional Sections

1. Anti-Dilution Protection: Protects investor against equity dilution, included when dealing with companies likely to raise future rounds

2. Strategic Rights: Additional rights for strategic investors, included when investor brings strategic value beyond capital

3. Environmental and Social Compliance: Included when investment has significant environmental or social impact considerations

4. Foreign Investment Compliance: Specific provisions for foreign investors to ensure FEMA compliance

5. State-Specific Provisions: Included when investment involves specific Indian state regulations or incentives

6. Industry-Specific Provisions: Added for investments in regulated sectors like financial services or infrastructure

7. Competition Compliance: Required when investment size triggers competition law requirements

8. Employee Matters: Included when investment involves significant employee-related considerations

Suggested Schedules

1. Investment Schedule: Detailed breakdown of investment amounts, tranches, and timelines

2. Conditions Precedent Checklist: List of all conditions to be satisfied before investment

3. Warranties Schedule: Detailed warranties given by the parties

4. Corporate Information: Details of company structure, shareholding, and corporate documents

5. Reserved Matters: List of decisions requiring investor approval

6. Regulatory Approvals: List of required governmental and regulatory approvals

7. Disclosure Schedule: Exceptions and qualifications to warranties

8. Form of Investment Instruments: Templates for share subscription and shareholders agreements

9. Valuation Methodology: Agreed methods for calculating company/investment valuation

10. Compliance Certificates: Forms of various compliance certificates required under the agreement

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Affiliate
Agreement
Applicable Law
Board
Business Day
Business Plan
Closing
Closing Date
Companies Act
Competitor
Completion
Conditions Precedent
Confidential Information
Control
Director
Effective Date
Encumbrance
Equity Shares
Event of Default
Exercise Notice
Exercise Period
Exit Event
Fair Market Value
FEMA
Financial Year
Force Majeure Event
Fully Diluted Basis
Governmental Authority
Group Company
Holding Company
Indian GAAP
Investment Amount
Investment Period
Investment Securities
Investor Nominee Director
IPO
Key Management Personnel
Material Adverse Effect
Member
Memorandum and Articles
Ordinary Course of Business
Parent Company
Parties
Person
Promoter
Put Option
Related Party
Relevant Market
Reserved Matters
RBI
SEBI
Securities
Shareholders
Shareholders Agreement
Shares
Subsidiary
Substantial Shareholder
Tag-Along Right
Tax
Term
Territory
Third Party
Transaction Documents
Transfer
Valuation
Voting Rights
Clauses
Interpretation
Conditions Precedent
Investment Terms
Subscription Rights
Payment Terms
Share Issuance
Anti-dilution Protection
Board Composition
Reserved Matters
Information Rights
Management Rights
Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Put Option
Call Option
Pre-emptive Rights
Exit Rights
IPO Rights
Representations and Warranties
Covenants
Non-Compete
Non-Solicitation
Confidentiality
Indemnification
Force Majeure
Term and Termination
Events of Default
Regulatory Compliance
Foreign Investment Compliance
Documentation
Notices
Assignment
Amendment
Waiver
Severability
Governing Law
Dispute Resolution
Jurisdiction
Entire Agreement
Counterparts
Relevant Industries

Technology

Manufacturing

Financial Services

Healthcare

Real Estate

Infrastructure

Renewable Energy

E-commerce

Telecommunications

Pharmaceutical

Retail

Agriculture

Education

Automotive

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Investment

Risk Management

Corporate Strategy

Board Secretariat

Due Diligence

Mergers and Acquisitions

Treasury

Tax

Regulatory Affairs

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

General Counsel

Investment Director

Corporate Development Manager

Finance Director

Legal Counsel

Investment Manager

Compliance Officer

Company Secretary

Private Equity Associate

Venture Capital Associate

Due Diligence Manager

Risk Manager

Corporate Strategy Director

Portfolio Manager

Managing Partner

Board Director

Industries
Foreign Exchange Management Act, 1999 (FEMA): Governs all foreign investment transactions, cross-border payments, and foreign exchange dealings in India
Companies Act, 2013: Primary legislation governing company formation, operation, and corporate governance aspects in India
Securities and Exchange Board of India Act, 1992: Regulates securities markets and protects investor interests, crucial for investment structures involving securities
Income Tax Act, 1961: Governs taxation aspects of investments, including capital gains, dividend distribution, and withholding tax obligations
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India
Arbitration and Conciliation Act, 1996: Framework for dispute resolution through arbitration, essential for international investment agreements
Prevention of Money Laundering Act, 2002: Ensures compliance with anti-money laundering regulations in investment transactions
Competition Act, 2002: Regulates market competition and may affect investment structures requiring competition clearance
Specific State Investment Laws: State-specific regulations that may affect investments in particular Indian states
Foreign Direct Investment Policy: Government policy document updated periodically that specifies sector-wise investment caps and conditions
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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