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Articles (non-leveraged investment)—checklist

Articles (non-leveraged investment)—checklist Objects Is it necessary or appropriate for the company to restrict its objects? If the company was incorporated before 1 October 2009, check if any of the objects stated in its memorandum of association need deleting (by way of a members’ special resolution). Application of model articles Determine if the model articles are to apply to the company. If the company was incorporated before 1 October 2009, consider whether Table A should still apply (if not previously amended). Determine what, if any, of the model articles should not apply to the company. Board of directors How many directors will be on the board? Which of the founders will be directors? How many directors will the investor have the right to appoint to the board? What is the quorum for board meetings? Does the chair (or another director) have a second or casting vote? Are fees payable to the investor directors and/or chair? If so, what are they? Set out administrative matters relating to the board (eg frequency...

Articles (MBO)—checklist

Articles (MBO)—checklist Objects Is it necessary or appropriate for the company to restrict its objects? If the company was incorporated before 1 October 2009, check if any of the objects stated in its memorandum of association need deleting (by way of a members’ special resolution). Application of model articles Determine if the model articles are to apply to the company. If the company was incorporated before 1 October 2009, consider whether Table A should still apply (if not previously amended). Determine what, if any, of the model articles should not apply to the company. Board of directors How many directors will be on the board? Which of the managers will be directors? How many directors will the investor have the right to appoint to the board? What is the quorum for board meetings? Does the chair (or other director) have a second or casting vote? Are fees payable to the investor directors and/or chair? If so, what are they? Set out administrative matters relating to the board (eg frequency of...

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Practical steps involved in implementing growth shares

Practical steps involved in implementing growth shares What are growth shares and are they appropriate? Growth shares, also known as value shares or hurdle shares, are a special class of shares that have restricted rights. These rights are designed to allow employees only to participate in post-acquisition increases in the value of the company. For more detailed explanation of the key features of growth shares and when they are normally introduced by a company, see Practice Note: Growth shares (value shares). Key features of growth shares Growth shares are specially constituted and classified under the articles of association of the company as a separate class of shares from the existing shares in the company. They will be issued to selected employees and will be subject to the provisions of the articles of association and also either to the subscription agreement that each participating employee will be asked to sign or the option documentation that they enter into, where the employee acquires their growth shares via an option over...

Drafting and negotiating the articles of association in a private equity buyout transaction

Drafting and negotiating the articles of association in a private equity buyout transaction This Practice Note is part of the Lexis+® UK Corporate private equity buyout transaction toolkit. Drafting the articles The private equity investor's lawyers will generally prepare the first draft of the articles of association (Articles). Which precedent agreement to use When looking for a suitable Precedent, the main factor relevant to the choice of Precedent is whether you choose a single investor or multiple investors version (the latter appropriate where there is a syndicate of investors). For a guide to certain key matters to be considered when drafting and/or reviewing the Articles, see Practice Note: A guide to drafting articles of association for a buyout transaction. For a general overview of what the equity terms may be and other relevant issues, see Practice Notes: • Private equity financing—equity • Understanding share capital • Class rights and variation of class rights • Allotment and issue of shares—introductory points • Unfair prejudice claims—fundamentals • Derivative...

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EMI share options term sheet

EMI share options term sheet [INSERT NAME OF COMPANY] EMI SHARE OPtions This term sheet summarises a proposal to incentivise key employees of [insert name of company] (referred to below as the ‘Company’) by granting those employees statutory tax advantaged enterprise management incentives (EMI) share options over shares in the Company (EMI Options). All issues raised in this document are for discussion purposes and each should be considered carefully before implementation. 1 Overview The EMI scheme is a highly flexible and tax-efficient share option scheme designed specifically for small/medium-sized businesses. EMI schemes are one of the most popular of the share option schemes available to companies. EMI Options must be granted for commercial reasons in order to recruit or retain an employee in a company, and not as part of a scheme or arrangement the main purpose (or one of the main purposes) of which is the avoidance of tax. Under the terms of the proposal, participants will be granted EMI share options with an exercise...

Heads of terms—equity

Heads of terms—equity [ On letterhead of the Investor ] Strictly private and confidential [insert Manager names] [insert contact address of Managers] (Managers) Date: [insert date] SUBJECT TO CONTRACT Dear Managers, Proposed investment in [insert name and registered number of company] (Company) 1 Introduction 1.1 Further to our recent discussions, this letter sets out the principal terms and conditions upon and subject to which we have agreed to make an investment with you in the Company (Proposed Investment). 1.2 The terms in this letter are not exhaustive and, with the exception of this paragraph 1.2 and paragraphs 14, 15, 16, 17 and 18, are subject to contract and not intended to be legally binding on the parties. No party to this letter shall be legally bound to proceed with the Proposed Investment unless and until a formal written [ share purchase agreement OR asset purchase agreement] is entered into. 1.3 Following the Proposed Investment, it is intended that the Company will acquire [the entire issued share capital OR...

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