黑料视频

Funding Term Sheet Template for Belgium

A Funding Term Sheet under Belgian law is a preliminary document that outlines the proposed terms and conditions of an investment transaction. It serves as a foundation for negotiation and subsequent definitive agreements, incorporating key elements of Belgian corporate law and EU regulations. While generally non-binding except for specific provisions like confidentiality and exclusivity, it details crucial aspects such as investment amount, valuation, security types, investor rights, and governance provisions. The document must comply with Belgian Companies and Associations Code requirements and consider EU-wide regulatory frameworks for investments and securities.

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What is a Funding Term Sheet?

The Funding Term Sheet is a critical preliminary document used in investment transactions under Belgian law, typically preceding full investment agreements. It is employed when companies seek external funding and need to document the principal terms of the proposed investment. The document captures essential commercial and legal terms including investment structure, valuation, rights, and conditions, while considering Belgian corporate law requirements and EU regulations. Though primarily non-binding, it forms the foundation for negotiation and drafting of definitive agreements. The term sheet must account for specific Belgian legal requirements regarding corporate governance, securities regulations, and financial market rules, while also considering broader EU regulatory frameworks that may impact the investment structure.

What sections should be included in a Funding Term Sheet?

1. Parties: Identification of the company receiving funding and the potential investor(s)

2. Background: Brief description of the company, purpose of the investment, and current fundraising round

3. Definitions: Key terms used throughout the term sheet

4. Investment Overview: Summary of investment amount, valuation, and type of securities being offered

5. Securities Details: Detailed description of the type of securities, price per share/unit, and total number being offered

6. Investment Terms: Key economic terms including pre-money valuation, capitalization table, and share classes

7. Investor Rights: Voting rights, board representation, information rights, and other control provisions

8. Transfer Restrictions: Limitations on transfer of securities, right of first refusal, tag-along and drag-along rights

9. Closing Conditions: Prerequisites for completing the investment, including due diligence and regulatory approvals

10. Confidentiality: Binding provisions regarding the confidentiality of the term sheet and negotiations

11. Exclusivity: Period during which the company cannot seek or accept other investment offers

12. Timeline: Expected schedule for completing due diligence and executing definitive agreements

13. Governing Law: Specification of Belgian law as governing law and jurisdiction

What sections are optional to include in a Funding Term Sheet?

1. Anti-dilution Protection: Used when investors require protection against future down rounds, specifying adjustment mechanisms

2. Conversion Rights: Include when offering convertible securities, detailing conversion triggers and ratios

3. Liquidation Preference: Added for preferred share investments, specifying priority and multiplication in liquidation events

4. Dividend Rights: Include when investors expect dividend payments, stating whether cumulative or non-cumulative

5. Pre-emptive Rights: Used when investors require rights to participate in future funding rounds

6. Founders' Commitments: Include when specific commitments from founders are required (vesting, non-compete, etc.)

7. MFN Clause: Most Favored Nation clause for convertible instruments, used in early-stage investments

8. Strategic Rights: Include for strategic investors requiring specific commercial rights or partnerships

What schedules should be included in a Funding Term Sheet?

1. Cap Table: Current and post-investment capitalization table showing ownership structure

2. Key Terms Summary: Single-page summary of the most important commercial terms

3. Use of Proceeds: Detailed breakdown of how the investment funds will be used

4. Milestone Schedule: If investment is tranched, schedule of milestones triggering subsequent investment rounds

Authors

Alex Denne

Head of Growth (Open Source Law) @ 黑料视频 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Belgium

Publisher

黑料视频

Document Type

Financing Agreement

Cost

Free to use

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