Funding Term Sheet Template for Singapore
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What is a Funding Term Sheet?
The Funding Term Sheet is a crucial document in Singapore's investment landscape, typically used during the preliminary stages of investment negotiations. It serves as a roadmap for the eventual detailed investment agreements and helps parties align on key commercial terms before incurring significant legal costs. Under Singapore's legal framework, while most terms in a term sheet are non-binding, they set important precedents for the final documentation. This document typically includes valuation, investment amount, share rights, governance provisions, and investor protections, structured in compliance with Singapore's Companies Act and Securities and Futures Act.
About the Funding Term Sheet
A funding term sheet is an essential preliminary document that outlines the key terms and conditions of an investment before you proceed to formal agreements. In Singapore's dynamic investment landscape, this document serves as your roadmap for structuring deals while ensuring compliance with local securities laws and corporate governance requirements.
When do you need this document?
You need a funding term sheet when you're raising capital for your Singapore company or considering investment opportunities. This document becomes crucial during Series A, B, or later funding rounds where venture capital firms or institutional investors are involved. Startups seeking angel investment, established companies pursuing growth capital, or businesses planning strategic partnerships all benefit from having clear preliminary terms documented. The term sheet also proves valuable when you're negotiating with multiple potential investors, as it helps standardise discussions and compare different offers objectively.
Key legal considerations
Your funding term sheet must carefully address several critical legal elements to protect all parties involved. Valuation terms require precise definition of pre-money and post-money valuations to avoid disputes over ownership percentages. Liquidation preferences need clear specification to determine how proceeds are distributed in exit scenarios. Anti-dilution provisions should be structured to protect investor interests while maintaining management incentives. Board composition and voting rights provisions must balance investor oversight with operational flexibility. Additionally, you should include comprehensive representations and warranties to ensure all parties understand their obligations and the company's current status.
Legal requirements in Singapore
Under Singapore law, your funding term sheet must comply with the Companies Act requirements for share issuances and transfers. The Securities and Futures Act governs how you can offer securities, with specific exemptions available for private placements to accredited investors. You must ensure compliance with MAS guidelines regarding fund management and investment products if applicable. The document should specify whether the investment qualifies for small offer exemptions or requires prospectus compliance. Foreign investment considerations under the Foreign Investment Review Board may apply depending on your business sector. Personal data protection requirements under the PDPA must be addressed when collecting investor information. Finally, your term sheet should clearly state which provisions are legally binding versus merely indicative to avoid unintended contractual obligations.
GOVERNING LAW
Applicable law
This Funding Term Sheet is drafted to comply with Singapore law. Key legislation includes:
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