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What is an Investment Agreement?

An Investment Agreement spells out the terms and conditions when someone puts money into an Irish business in exchange for shares or other returns. It covers key details like how much is being invested, what the investor gets in return, and when they can expect returns on their investment.

Under Irish company law, these agreements protect both investors and companies by clearly stating everyone's rights and obligations. They typically include important safeguards like warranties, anti-dilution provisions, and board representation rights. For startups seeking funding through Enterprise Ireland or private investors, having a solid investment agreement is crucial for securing capital while maintaining clear ownership structures.

When should you use an Investment Agreement?

Use an Investment Agreement when bringing new investors into your Irish business, especially during funding rounds or when offering equity stakes. This document becomes essential once you've found interested investors and need to formalize the terms of their investment, but before any money changes hands.

The agreement proves particularly valuable for high-growth startups seeking venture capital, established companies bringing in strategic partners, or family businesses accepting outside investment. It's crucial when dealing with Enterprise Ireland funding schemes, angel investors, or venture capital firms - any situation where you need to clearly document investment terms, ownership rights, and future exit strategies.

What are the different types of Investment Agreement?

Who should typically use an Investment Agreement?

  • Investors: Both individual angel investors and institutional investors like venture capital firms who provide funding in exchange for equity or returns
  • Company Directors: Responsible for negotiating and signing Investment Agreements on behalf of the receiving company
  • Legal Counsel: Solicitors who draft and review agreements to ensure compliance with Irish company law and protect their clients' interests
  • Enterprise Ireland: Often involved as a co-investor or advisor, particularly in high-potential startup investments
  • Company Secretaries: Handle documentation, filing requirements, and maintain corporate records related to investments

How do you write an Investment Agreement?

  • Company Details: Gather full legal name, registration number, registered address, and current shareholding structure
  • Investment Terms: Document the exact investment amount, valuation, and type of shares or securities being offered
  • Due Diligence: Compile financial statements, business plans, and material contracts for investor review
  • Stakeholder Rights: Define voting rights, board representation, and any special privileges for new investors
  • Exit Strategy: Outline conditions for future sales, IPOs, or transfer of shares
  • Platform Support: Use our automated system to generate a legally sound Investment Agreement that includes all required elements under Irish law

What should be included in an Investment Agreement?

  • Parties & Capacity: Full legal names and details of all investors and the company receiving investment
  • Investment Terms: Precise amount, payment schedule, and form of investment (equity, convertible note, etc.)
  • Shareholding Details: Share class, number of shares, price per share, and post-investment ownership structure
  • Warranties: Company representations about its financial position and legal status
  • Investor Rights: Voting powers, board seats, and information access rights
  • Exit Provisions: Tag-along rights, drag-along rights, and share transfer restrictions
  • Irish Law Compliance: Reference to Companies Act 2014 and governing law clause

What's the difference between an Investment Agreement and an Investment Agreement Term Sheet?

While both documents deal with investments, an Investment Agreement and an Investment Agreement Term Sheet serve distinct purposes in Irish business transactions. The key differences include:

  • Legal Binding: Investment Agreements are fully binding contracts that detail all investment terms, while Term Sheets are typically non-binding summaries of key deal points
  • Timing: Term Sheets come first as preliminary documents to outline basic terms, with the full Investment Agreement following after negotiations
  • Detail Level: Investment Agreements contain comprehensive legal provisions, warranties, and detailed rights, while Term Sheets focus on core commercial terms only
  • Purpose: Term Sheets facilitate initial discussions and agreement on basic terms, while Investment Agreements provide the complete legal framework for the investment
  • Enforcement: Only Investment Agreements can be legally enforced under Irish law, offering full protection to all parties

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