After you have agreed on the term sheet (signed or not), the investor will start the final parts of the due diligence while the subscription agreement and shareholders’ agreement (Norwegian: aksjonæravtale) are drafted. When the due diligence is complete it’s time to sign the subscription agreement and shareholders’ agreement.
The subscription agreement regulates the terms of the investment itself, what happens in connection to the investment and what warranties the founders give to the new investors. The shareholders’ agreement, on the other hand, stipulates the terms for the future partnership and is not directly related to the investment itself. The subscription agreement refers to the shareholders’ agreement and typically they are signed at the same time.
Sometimes, these documents are merged to one big document (often called investment agreement) but for clarity they are usually separated.
The subscription agreement is very similar to the term sheet and doesn’t contain so many new things. Some things are explained in greater detail, such as warranties and indemnification but it’s quite straightforward.
Don’t forget to add the investors’ and their amounts in the clause called subscription. Sometimes the investors have to sign separate subscription lists but in this version the subscription takes place by signing the subscription agreement.
The shareholders’ agreement is probably one of the most complex and important agreements you will ever sign. It contains almost everything related to the shareholding of the company, including vesting, share transfer restrictions, drag along, non-competition etc. Breaking the agreement can have severe consequences so make sure you understand it.
Hopefully there will be nothing strange compared to the term sheet but count on new discussions popping up around details not specified in the term sheet. For example, everything in the clause transfer of shares is not mentioned in the term sheet, but quite standard.
The shareholders’ agreement should always be signed by all shareholders in the company. If new shareholders enter the company, they have to sign the existing agreement by signing an adherence agreement (attached as a schedule to the shareholders’ agreement).
If you have a lead investor, use the shareholders’ agreement called “with lead investor” (duh!). The other agreement (“only small investors”) is tailored for a startup raising a small round where no investor takes lead. If you have no investor at all, but want a shareholders’ agreement between the founders, please see the founders’ agreement instead.
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