Preference Share Agreement

Preference Share Agreement Template for Germany

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Key Requirements PROMPT example:

"I need a Preference Share Agreement under German law for a Series B investment round in our tech startup, with a 1x liquidation preference, anti-dilution protection, and tag-along rights for an investment closing in March 2025."

Document background

The Preference Share Agreement is a crucial document used when a company seeks to raise capital by issuing shares with preferential rights while operating under German law. This agreement is particularly relevant for growth-stage companies, scale-ups, and established businesses seeking additional investment without immediately diluting existing shareholders' control. The document must comply with German corporate law, particularly the Aktiengesetz (AktG) and Handelsgesetzbuch (HGB), and includes detailed provisions on share rights, corporate governance, and investor protections. It's commonly used in venture capital and private equity transactions, requiring careful consideration of both German corporate law requirements and market standards for preference share structures.

Suggested Sections

1. Parties: Identification of the company issuing preference shares and the preference shareholder(s)

2. Background: Context of the preference share issuance, including company status and purpose of the investment

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Subscription and Issuance: Terms of subscription, payment, and issuance of preference shares

5. Preference Share Rights: Detailed specification of preferential rights, including dividend preferences, liquidation preferences, and voting rights

6. Conversion Rights: Terms and conditions for converting preference shares into ordinary shares

7. Transfer Restrictions: Limitations and conditions on the transfer of preference shares

8. Corporate Governance: Board representation rights and other governance matters

9. Information Rights: Shareholder information and inspection rights

10. Representations and Warranties: Company's representations and warranties to the preference shareholders

11. Covenants: Ongoing obligations of the company and other shareholders

12. Term and Termination: Duration of the agreement and termination provisions

13. Miscellaneous: Standard legal provisions including notices, amendments, governing law, and jurisdiction

Optional Sections

1. Anti-dilution Protection: Provisions protecting preference shareholders from dilution in future funding rounds

2. Tag-Along Rights: Rights of preference shareholders to join in sales by other shareholders

3. Drag-Along Rights: Rights to compel other shareholders to join in a sale

4. Redemption Rights: Terms under which preference shares can be redeemed

5. Pre-emptive Rights: Rights of first refusal on new share issuances

6. Exit Rights: Specific rights related to company sale or IPO

7. Dividend Policy: Detailed policy for dividend calculations and distributions

8. Management Provisions: Specific provisions regarding management appointments and removal

Suggested Schedules

1. Share Capital Structure: Current and post-investment share capital structure

2. Subscription Details: Detailed terms of subscription including price and payment terms

3. Articles Amendments: Required amendments to the company's articles of association

4. Shareholders' Resolution: Form of shareholders' resolution approving the preference share issuance

5. Registration Rights: Detailed provisions regarding registration rights for converted shares

6. Calculation Examples: Examples of anti-dilution, conversion, and preference calculations

7. Form of Accession Deed: Template for new shareholders to accede to the agreement

8. Corporate Authorizations: Copies of relevant corporate approvals and authorizations

Authors

Alex Denne

Head of Growth (Open Source Law) @ 抖阴短视频 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Technology

Manufacturing

Healthcare

Renewable Energy

E-commerce

Financial Services

Biotechnology

Real Estate

Software

Consumer Goods

Infrastructure

Telecommunications

Relevant Teams

Legal

Finance

Corporate Development

Treasury

Compliance

Executive Leadership

Investment

Corporate Governance

Company Secretariat

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Lawyer

Investment Manager

Venture Capital Partner

Private Equity Director

Corporate Secretary

Finance Director

Compliance Officer

Board Member

Investment Analyst

Corporate Development Manager

Treasury Manager

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Let's create your Preference Share Agreement

Authors

Alex Denne

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