Knowledge Highlights 27 November 2024
SAL and SVCA launch expanded and updated Venture Capital Investment Model Agreements
The Singapore Academy of Law (SAL) and the Singapore Venture & Private Capital Association (“SVCA”) have released an expanded and updated suite of Venture Capital Investment Model Agreements (“VIMA”).
The latest iteration of the VIMA, called VIMA 2.0, includes new pre-Series A documents that facilitate and support a start-up’s journey towards its first fundraising, and additional Series A documents, including a model environmental, social and governance (“ESG”) letter agreement, which provides a reference for incorporating ESG-related provisions in a share or convertible note financing in a Singapore company.
First launched in October 2018, the VIMA is a suite of model documents that is intended to serve as a reference point and useful resource for the venture capital and start-up community in the region. As they have been prepared taking into account the interests of both the investor and company in a balanced and pragmatic fashion, the VIMA helps to narrow the scope of negotiation and open issues between the contracting parties to help them reach common ground more quickly, allowing parties to focus their time on addressing more deal-specific issues.
The VIMA initiative is supported by a working group, which is responsible for the documents. Allen & Gledhill is pleased to have been a member of the core working group for the VIMA initiative since the conception of the initiative in 2018, and to have contributed our expertise in the preparation of the documents in VIMA 2.0. With our deep familiarity with the VIMA and fundraising transactions, we are well-positioned to help parties who are keen to incorporate the VIMA in their transactions.
Series A documents
The new Series A documents include:
- Convertible Note
- Employee Share Option Plan Primer
- Model Constitution
- ESG Letter Agreement (short form)
- ESG Letter Agreement (long form)
For companies that are involved in a transaction that requires ESG documentation, the new ESG Letter Agreement sets out some examples of how ESG-related provisions can be incorporated in an investment by way of a share financing or convertible note financing in a Singapore company. Early-stage companies may consider using the short form letter agreement, while later stage companies, growth or matured companies may consider using the long form letter agreement.
The initial model agreements (such as the Term Sheet, Shareholders’ Agreement and Subscription Agreement) have also been updated and revised to incorporate more annotations and alternative provisions.
Pre-Series A documents
The new pre-Series A documents comprise:
- Mutual Non-disclosure Agreement
- Founders’ Agreement
- Employee Deed of Assignment of Intellectual Property
- Employee Share Option Plan Schedule
Each document includes explanatory and drafting notes on various clauses in the documents. The documents have been drafted based on Singapore law, and therefore incorporate Singapore law as the chosen governing law and Singapore as the chosen dispute resolution forum.
Reference materials
The Venture Capital Investment Model Agreements are available for free download on Singapore Law Watch www.singaporelawwatch.sg by clicking here and the SVCA website www.svca.org.sg by clicking here.
