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Continuous Agreement For Future Equity Generator for England and Wales

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Key Requirements PROMPT example:

Continuous Agreement For Future Equity

"I need a Continuous Agreement For Future Equity for my tech startup to secure a £500,000 investment from an angel investor, with a 20% discount rate and a £5M valuation cap, to be completed by March 2025."

Document background
The Continuous Agreement For Future Equity (CAFE) has emerged as a popular funding instrument in the UK startup ecosystem, particularly under English and Welsh law. It provides a streamlined approach to early-stage investment, offering investors future equity rights while allowing companies to defer valuation discussions. The document is particularly valuable when companies need quick access to capital without the complexity of establishing a current valuation or issuing immediate equity. It includes provisions for conversion triggers, share price calculations, and investor protections, all structured within the framework of English company law.
Suggested Sections

1. Parties: Identification and details of the contracting parties

2. Background: Context and purpose of the agreement

3. Definitions: Key terms used throughout the agreement

4. Purchase Amount: Investment amount and payment terms

5. Events: Qualifying events triggering conversion rights

6. Conversion Rights: Terms and mechanics of conversion into equity

7. Company Representations: Key warranties and representations by the company

Optional Sections

1. Pro-rata Rights: Rights allowing investors to participate in future funding rounds to maintain their ownership percentage

2. Information Rights: Provisions granting investors rights to receive periodic financial and operational information from the company

3. MFN Provision: Most favored nation clause ensuring investors receive the best terms offered to subsequent investors

Suggested Schedules

1. Cap Table: Current shareholding structure showing ownership percentages and share classes

2. Calculation Methods: Detailed methodology for calculating conversion price and other financial terms

3. Form of Shareholders' Agreement: Template of shareholders' agreement to be entered into upon conversion

4. Corporate Authorizations: Copies of relevant board and shareholder resolutions authorizing the agreement

Authors

Alex Denne

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

Relevant legal definitions






























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Relevant Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company operations including share capital provisions, directors' duties, company constitution requirements, pre-emption rights, and share allotment rules

Financial Services and Markets Act 2000: Regulates investment activities, financial promotion restrictions, and regulated activities provisions in financial services

Financial Services Act 2012: Establishes the financial regulatory framework and investment protections in the UK financial system

Consumer Rights Act 2015: Relevant if any party to the agreement could be classified as a consumer, providing consumer protection measures

Law of Property (Miscellaneous Provisions) Act 1989: Fundamental contract law principles governing property and contractual arrangements

Corporate Insolvency and Governance Act 2020: Governs company restructuring and creditor rights in insolvency situations

FCA Regulations: Regulatory requirements for investment agreements and financial promotion rules set by the Financial Conduct Authority

Income Tax Act 2007: Tax legislation relevant to investment agreements and equity arrangements

Corporation Tax Act 2010: Corporate tax implications for equity agreements and company restructuring

Equality Act 2010: Ensures non-discrimination provisions in contractual arrangements

Data Protection Act 2018: Governs the handling of personal data in contractual relationships, including UK GDPR compliance requirements

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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