However, if your investor is to hold a minority stake and/or not be “hands-on” (i.e. often actively involved) with the company in which he is investing, it is likely that he is looking for an element of the agreed investment documentation to protect his interests. As the founder of the company, you want their money so that you can be confronted with a “Take it or leave it” proposal. The worst thing you can do in such a situation is to easily accept the conditions offered, especially if you don`t want to review them in detail (in order to find out what you agree with). For investments in life sciences companies, it is customary for payments to be made in instalments, each of which is measured against agreed milestones. Typically, these milestones are measured, for example, by the different stages of development of one or more products, the company`s agreement to adopt new developments, or the results of preclinical or clinical trials. It is customary for investors to waive milestones or other closing conditions if they are not met. After already presenting the items for the agreement, you will then need to write down the terms of payment and service. As a rule, payment terms differ from the nature of the business and depend on the size of the business. So indicate the payment terms you want to have in the investment contract. However, make sure that the parties involved are aware of this.
In the agreement, define the payment method and the frequency with which the payment must be made. This, too, needs to be well explained. An adhesion clause is one of the most frequently found provisions in investment agreements, which obliges all subsequent purchasers of shares to be subject to the terms of the agreement. It is customary to have a provision obliging any buyer to conclude a contractual act which has the effect of treating the new shareholder as if he were an initial part of the investment contract and therefore bound by the provisions of the contract. Investors will usually have a minority stake, that is, together they will hold less than 50% of the company`s shares at the end of a first investment. In the past, however, it is not uncommon for investors to quickly hold a majority stake in life sciences companies, especially when the company needs more than one investment cycle due to the size of each investment and the amount of money often required to develop a life sciences company`s products. Under English company law, many shareholder businesses can be adopted either by a majority of shareholders or by at least 75% of shareholders. If you have a business relationship involving shares or if you are already in such a business relationship, you can use an investor agreement to safeguard your fundamental interests. Whether you`re investing capital or owning an investor-backed business, an investor agreement can help protect you.
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