MAIN & GIZ EGYPT Launch 3 Free Egyptian Standard Legal Documents for Investors & Founders to Save Time and Money

The Middle East Angel Investment Network (MAIN) in partnership with the German Development Cooperation Implemented by GIZ Egypt launched free standard Egyptian legal documents to facilitate the fundraising process between early-stage investors and founders.

The documents set include Equity Term Sheet, Shareholder Agreement and Subscription Agreement. A term sheet is the document that summarizes the principal terms of an equity investment in a company and forms the basis for the drafting and the negotiation of the definitive legal agreements (mainly the subscription agreement and the shareholders agreement) to be signed by the relevant parties after signing the term sheet. A term sheet is usually of a non-binding nature except for some clauses such as exclusivity and confidentiality provisions which are of a binding nature. The key provisions of a term sheet include, interalia, the details of the target company, the founders and the investor(s), the investment amount, the pre- and post-valuation of the target company, the expected closing date, the structure of the investment, the set of the definitive agreements including a summary of their main provisions and the information rights of the investor(s).

A shareholders agreement is the document that governs the rights and obligations of the shareholders in a company and regulates certain aspects of the management of such company and the operation of its business. The key terms of the shareholders agreement include terms such as corporate governance rights, exit rights including the right of first refusal (ROFR), lockup and tag along rights. The shareholders agreement also includes customary non-competition, non-solicitation, and confidentiality undertakings

A subscription agreement is the document that includes the terms and conditions governing the investment to be made by the investor(s) in a company. The key terms of the subscription agreement include terms such as details of the share subscription of the investor in the share capital of the company and the terms of payment, the conditions precedent required for the consummation of the subscription, closing actions, customary representations and warranties and confidentiality undertakings applicable to the subscription.

 “The lack of quality, best practice Egyptian investment documents is a bottleneck that can lead to lengthy negotiations, expensive legal fees and have a negative impact on the rights of the parties in future fundraising rounds,” said Zeina Mandour, general manager at The Cairo Angels. 

“Our hope is that these free legal documents will be adopted by early-stage investors in the region, thereby making the fundraising process faster and easier while protecting the rights of both investors and founders,” said Sara Gamay, board member at Cairo Angels and MAIN.

 “We focus on supporting early-stage startups and investors to foster innovation, create economic growth and job opportunities for the Egyptian people. We hope that this initiative increases transparency and trust in the investment process and reduces legal uncertainties,” Andreas Ruepp, head of Project Access to Financial Services for SMEs at GIZ Egypt.