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Simple Agreement For Equity Generator for England and Wales

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Key Requirements PROMPT example:

Simple Agreement For Equity

"I need a Simple Agreement For Equity for my UK-based technology startup to secure a £500,000 investment from an angel investor, with a valuation cap of £5 million and including pro-rata rights for future funding rounds, to be completed by March 2025."

Document background
The Simple Agreement for Equity (SAFE) was originally developed by Y Combinator for US companies but has been adapted for use under English and Welsh law. It serves as an efficient mechanism for early-stage investment, particularly suitable for seed rounds where company valuation may be premature or impractical. The agreement provides investors with rights to future equity while allowing companies to defer valuation discussions until a priced round occurs. This version incorporates specific provisions required under English and Welsh law, including compliance with the Companies Act 2006 and relevant financial services regulations.
Suggested Sections

1. Parties: Identification of the company and investor, including full legal names and registered addresses

2. Background: Context of the investment and purpose of the agreement, including company status and investment rationale

3. Definitions: Key terms used throughout the agreement including Qualified Financing, Valuation Cap, and Conversion Price

4. Investment Amount: Specified amount to be invested and payment terms

5. Events Triggering Conversion: Circumstances under which the investment converts to equity, including qualified financing, exit, and dissolution events

6. Conversion Mechanism: Detailed process and formula for converting the investment into equity shares

7. Company Representations: Key warranties about the company's status, authority, and compliance with laws

Optional Sections

1. Most Favored Nation: Provision ensuring investor receives the most favorable terms offered to any other SAFE investor

2. Pro-rata Rights: Rights allowing investor to maintain their percentage ownership in future funding rounds

3. Information Rights: Investor's rights to receive periodic financial and operational information from the company

4. Board Observer Rights: Rights to attend and observe board meetings without voting rights

Suggested Schedules

1. Schedule 1 - Cap Table: Current shareholding structure and capitalization of the company

2. Schedule 2 - Conversion Calculations: Detailed methodology and examples for calculating conversion prices and share allocation

3. Schedule 3 - Form of Shareholders Agreement: Template shareholders agreement to be executed upon conversion of the SAFE

4. Schedule 4 - Company Constitutional Documents: Current Articles of Association and other constitutional documents

5. Schedule 5 - Deed of Adherence: Form of deed to be executed upon conversion to bind the investor to existing agreements

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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Industries

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

Financial Services and Markets Act 2000 (FSMA): Regulatory framework covering financial promotion restrictions, investment regulations, and securities laws compliance

Corporate Governance Code: Non-statutory guidelines relevant for listed companies regarding corporate governance practices

Financial Services and Markets Act 2000 (Regulated Activities) Order 2001: Regulations concerning investment activities and financial instrument classifications

Consumer Rights Act 2015: Legislation protecting consumer rights, particularly relevant if the agreement involves retail investors

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

Income Tax Act 2007: Tax legislation governing income tax implications of equity agreements

Corporation Tax Act 2010: Tax legislation governing corporate tax implications of equity agreements

Data Protection Act 2018: Legislation governing the handling and protection of personal data, including UK GDPR compliance requirements

Money Laundering Regulations 2017: Anti-money laundering requirements and compliance procedures

Enterprise Investment Scheme Regulations: Regulations governing tax relief for qualifying investments under the Enterprise Investment Scheme

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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