NZVIF Term Sheet for Issue of Shares

NZVIF Term Sheet for Issue of Shares

Style Number: COM00011

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Key details

Number of variables: 277

Time to complete: Will depend varying on experience and the circumstances.  Using this term sheet should result in significant time savings for later transaction documents.  

Last updated by NZVIF: 23 December 2015

Last updated by LawHawk: May 2016

Drafted by: NZVIF

Other details

This document is the standard New Zealand Venture Investment Fund ("NZVIF") term sheet. NZVIF actually maintain two separate versions - one for ordinary shares and one for preference shares.  This document combines both NZVIF versions into a single document, and you can choose which provisions apply from a simple question.

Un-automated versions of the NZVIF term sheets can be found on the NZVIF website.

Using this form of document, you can quickly determine whether or not NZVIF is to be included as an investor. If they are not, then certain provisions don't need to be included.  If they are, then the provisions will automatically be included in the right locations.

There are many possible parties to an investment transaction.  These include NZVIF, the company, existing shareholders, "key people", new investors, and any guarantors. It is easy to add as many different parties as are required, and to select the correct type of entity for that person. The various roles they hold under the documents can be easily allocated between them.
Details of the investment can be captured, including whether an exact investment amount is to be specified or a range will apply. In addition, you can specify whether the investment will be in a single advance or in tranches. If tranches are relevant, you can specify whether the tranches are conditional on hitting particular milestones.  You can easily capture details of the committed investors, along with their committed investment amounts.  If there are investment syndicate nominees, details can be added.
The type of shares being subscribed for can be specified – whether they are ordinary or preference shares.
The standard NZVIF anti-dilution provisions can be included or excluded, and if they are included choices made between full-ratchet or narrow-based weighted-average ratchet options. Carve-outs to the anti-dilution mechanism can be specified for employee share schemes, or time limits for the application of the anti-dilutes can be imposed.
The full range of NZVIF conditions precedent can be easily selected from a drop down list, with further details added as applicable. Condition satisfaction dates can be specified.

Key people can be easily identified, and arrangements specified in relation to shares that they hold, and whether any of them will be subject to restrictions on transfer or vesting.

Detailed provisions regarding the composition of the board, and how the board will operate and be paid can be worked through quickly. Numbers of directors (in aggregate and of each different category) can be specified, along with details for how often the board will meet, and particular investor director protections that will apply.
Various details about the financial statements and timings for preparation can be easily captured.

If there is to be an employee share scheme, details can be specified.

Details of who will give the warranties to the investors (in addition to the company), and whether any warranties should be qualified by knowledge can be worked through. Individual warrantors who may have limited liability can be easily identified.

Arrangements around transaction fees and costs and expenses can be easily captured, and the range of ancillary details that need to be captured in a lengthy documents like this can all be answered in one place, rather than searching through the entire agreement.