18 May 2021

TL;DR

Shareholders’ Agreements (SHA), all versions

• Vesting clause completely rewritten
• Vesting now less generous to leaving founders
• Vesting guidelines changed to 3-8 years/5-10 years (with/without investors)
• Required votes for drag-along changed from 1/2 to 2/3
• Updated for easier use

Term Sheets (TS) & Subscription Agreement (SubA)

• Updated to comply with new SHA, (TS & SubA)
• “Existing Shareholders’” removed, (SubA)

SWEAT

• The consultant now invoices quarterly rather than everything initially

Updates to The StartupTools Standard

• Vesting
  • Vesting is now more friendly toward staying founders/shareholders if one founder leaves the company – and conversely more strict on leaving founders
  • The leaving shareholder can keep fewer shares (in case of Bad Leaver) and the unvested shares are sold for a lower value (in case of Good Leaver)
  • Vesting guidelines changed to 3-8 years/5-10 years (with/without investors)
• A 90% majority can now change the agreement as long as no party is treated disproportionally worse than any other party
• In case of a future financing round, a qualified majority can force all parties to sign the necessary agreements to make the financing round happen (as long as no party is affected worse than any other party)
• Required votes for drag-along changed from 1/2 to 2/3
• Non-Competition clause removed as default for non-permanent employments (Swedish: Allmän visstid)

These changes to TheStartupTools Standard has been thoroughly considered and passed the review of multiple trusted advisors within the Startup community. We believe that making these changes will achieve these main objectives:

• Contribute to keeping the cap-table of startups clean, even through the unfortunate event of losing a founder. Regardless of the reason for the leave. In our experience this is crucial to give the startup the best chance for future growth, in particular after losing a founder (changed vesting)
• Removing the (minimal) risk of hostage keeping for technicalities. That is when a minor shareholder wants disproportionate influence to consent to obvious minor changes/improvements of the Shareholders’ Agreement which does not change the relationship between the Shareholders (90% majority for changes)
• Keep The StartupTools Standard relevant through following the development of the market

Full Version

Shareholders’ Agreements

• Released Premium Versions for sale with additional guidance and commentary – webshop
• Vesting clause is completely rewritten to make it much easier to understand(note: The StartupTools Standard regarding vesting is also updated – see more above)
• Required votes for drag-along changed from 1/2 to 2/3
• Some general restructures to make the contracts more easily accessible for all users
• If liquidation preference is to be used in the Shareholders’ Agreement With VC Lead Investor-version (it is still optional), it is now implemented via real preference shares (previously only a contractual liquidation preference). The other SHA versions does not have an option for liquidation preference
• Simplified and shortened the veto rights of the lead investor/investor majority/founder majority
• Investors have a right to transfer their shares within their group

Subscription Agreement (SubA)

• Updated to comply with new SHA
• Removed “Existing Shareholders” from the agreement, so now only the company, founders and new investors need to sign it
• Minor updates for readability and bug fixes

Term Sheet

• Adaption to new Shareholders’ Agreement versions
• Minor replacements of words for clarification
•  

WISE Convertible

• Added Confidentiality Clause
• Minor language changes, nothing material

SWEAT

• The consultant now invoices quarterly rather than everything initially

Qualified Employee Stock Options (QESO)

• A narrower definition of “good leaver” introduced aligning even closer with the relevant Swedish tax law from January 2018
• Minor non-material updates to language