The Term Sheet For Investors is a fundamental document in Australian corporate finance and investment transactions, typically used when a company is seeking to raise capital from investors. This document serves as a preliminary agreement that outlines the principal terms and conditions of a proposed investment, including vital aspects such as valuation, investment amount, class of shares, investor rights, and governance provisions. While predominantly non-binding, except for specific clauses like confidentiality and exclusivity, it forms the basis for the preparation of formal binding documentation. Used across various stages of company growth, from seed funding to later-stage investments, the Term Sheet must align with Australian corporate law, ASIC regulations, and market practice. It is particularly crucial in establishing clear expectations and alignment between parties before significant resources are committed to full documentation.
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1. Parties: Identification of the company and the proposed investor(s)
2. Background: Brief description of the company, purpose of the investment, and current fundraising round
3. Definitions: Key terms used throughout the term sheet
4. Investment Terms: Amount of investment, type of securities, price per share/unit, and pre-money valuation
5. Company Capitalization: Current and post-investment capital structure, including fully diluted shares
6. Investor Rights: Key rights attached to the investment, including voting rights, anti-dilution protection, and pre-emptive rights
7. Board Composition: Structure and composition of the board, including any investor representation
8. Transfer Restrictions: Limitations on transfer of shares and any tag-along or drag-along rights
9. Information Rights: Investor's rights to receive financial and other company information
10. Exit Provisions: Terms related to liquidity events, IPO, and trade sales
11. Confidentiality: Binding provisions regarding the confidentiality of the term sheet and negotiations
12. Binding Effect: Statement of which provisions are binding and non-binding
13. Execution: Signature blocks for all parties
1. Dividend Rights: Include when the investment includes specific dividend rights or preferences
2. Liquidation Preference: Include for preferred share investments to specify ranking and preference multiplier
3. Conversion Rights: Include when the investment involves convertible securities
4. Anti-dilution Provisions: Include detailed anti-dilution terms when required by investors
5. Founder Commitments: Include when there are specific requirements for founder involvement or vesting
6. Strategic Rights: Include for strategic investors who require specific commercial rights or relationships
7. Environmental, Social and Governance: Include when investors have specific ESG requirements
8. Future Financing Rounds: Include when there are specific terms regarding future funding rounds
1. Cap Table: Detailed breakdown of current and post-investment shareholding structure
2. Key Terms Dictionary: Detailed explanations of complex investment terms and mechanics
3. Corporate Structure Chart: Diagram showing corporate structure pre and post-investment
4. Milestones Schedule: If investment is milestone-based, details of requirements and timing
5. Use of Funds: Detailed breakdown of how investment proceeds will be used
Relevant legal definitions
Affiliate
Anti-dilution Rights
ASIC
Board
Business Day
Capitalisation
Change of Control
Company
Completion
Confidential Information
Constitution
Conversion Price
Conversion Rights
Corporations Act
Directors
Drag-along Rights
EBITDA
Encumbrance
Exit Event
Fully Diluted Basis
Group
Holding Company
Independent Director
Investment Amount
Investment Securities
Investor Director
IPO
Issue Price
Key Management
Lead Investor
Liquidation Event
Liquidation Preference
Material Adverse Change
New Securities
Ordinary Shares
Pre-emptive Rights
Pre-money Valuation
Post-money Valuation
Preferred Shares
Pro Rata Share
Qualified IPO
Related Body Corporate
Related Party
Reserved Matters
Share Capital
Shareholders Agreement
Subsidiary
Tag-along Rights
Term Sheet
Transaction Documents
Warranties
Anti-dilution Rights
ASIC
Board
Business Day
Capitalisation
Change of Control
Company
Completion
Confidential Information
Constitution
Conversion Price
Conversion Rights
Corporations Act
Directors
Drag-along Rights
EBITDA
Encumbrance
Exit Event
Fully Diluted Basis
Group
Holding Company
Independent Director
Investment Amount
Investment Securities
Investor Director
IPO
Issue Price
Key Management
Lead Investor
Liquidation Event
Liquidation Preference
Material Adverse Change
New Securities
Ordinary Shares
Pre-emptive Rights
Pre-money Valuation
Post-money Valuation
Preferred Shares
Pro Rata Share
Qualified IPO
Related Body Corporate
Related Party
Reserved Matters
Share Capital
Shareholders Agreement
Subsidiary
Tag-along Rights
Term Sheet
Transaction Documents
Warranties
Clauses
Investment Terms
Share Capital
Valuation
Subscription Amount
Use of Proceeds
Board Composition
Board Rights
Voting Rights
Dividend Rights
Anti-dilution Protection
Pre-emptive Rights
Transfer Restrictions
Tag-along Rights
Drag-along Rights
Information Rights
Liquidation Preference
Conversion Rights
Exit Rights
IPO Rights
Reserved Matters
Investor Veto Rights
Management Rights
Founder Obligations
Confidentiality
Exclusivity
Due Diligence
Costs and Expenses
Governing Law
Binding Effect
Timeline
Share Capital
Valuation
Subscription Amount
Use of Proceeds
Board Composition
Board Rights
Voting Rights
Dividend Rights
Anti-dilution Protection
Pre-emptive Rights
Transfer Restrictions
Tag-along Rights
Drag-along Rights
Information Rights
Liquidation Preference
Conversion Rights
Exit Rights
IPO Rights
Reserved Matters
Investor Veto Rights
Management Rights
Founder Obligations
Confidentiality
Exclusivity
Due Diligence
Costs and Expenses
Governing Law
Binding Effect
Timeline
Relevant Industries
Technology
Financial Services
Healthcare
Renewable Energy
Mining and Resources
Agriculture
Real Estate
Manufacturing
Consumer Goods
Software and IT
Biotechnology
E-commerce
Professional Services
Media and Entertainment
Clean Technology
Infrastructure
Relevant Teams
Legal
Finance
Corporate Development
Executive Leadership
Compliance
Investment
Board of Directors
Company Secretariat
Risk Management
Strategic Planning
Mergers and Acquisitions
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Investment Director
Corporate Lawyer
Investment Manager
Venture Capital Associate
Private Equity Manager
Company Secretary
Business Development Director
Fund Manager
Investment Analyst
Corporate Development Manager
General Counsel
Managing Director
Board Director
Financial Controller
Investment Committee Member
Compliance Officer
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