New Model Documents for Early Stage Investments

On 26 February 2025 the British Private Equity & Venture Capital Association (“BVCA”) published the following new model documents for Series A investment rounds.

• Subscription Agreement
• Shareholders’ Agreement
• Articles of Association
• Summary of Terms

These build upon the versions published in February 2023 and are designed for a substantial investment being made in whole or in part by fund investors. Please note that they may not be suitable for seed investment rounds.

Our aim is simple: to promote industry-standard legal documentation in the UK so investors and entrepreneurs can focus on deal-specific matters.

Key changes

• Subscription Agreement
  • Additional short form alternative completion mechanics where full funds received before completion
  • New provisions providing for the transaction being the subject of regulatory investigation or being called in under the National Security and Investment Act 2021
  • Revised intellectual property, business systems and data protection warranties
• Shareholders’ Agreement
  • Optional language: (i) to restrict information rights for strategic investors; (ii) for the company to indemnify an Investor Director; and (iii) to make the EIS / VCT undertakings subject to the directors’ fiduciary duties.
  • New provision stating that investors are not restricted from investing in competitors, subject to certain conditions
  • Revised and additional company undertakings relating to anti-bribery, anti-money laundering, anti-tax evasion, sanctions, governance and financial policies and procedures
• Articles of Association
  • Removal of part of the bad leaver definition
  • Clarification of how the liquidation preference works and amendment so that the board may now determine the exchange rate (where relevant) in a waterfall
  • New language confirming how anti-dilution protection works where the Series A shares are held on conversion of convertible securities
  • New provisions around sanctioned persons, for example restricting the allotment and issue of shares to such persons

Further details about the key changes can be found on the BVCA website here.

The purpose of these documents is to establish a standardised starting point, with the associated cost and time efficiencies, for this type of transaction. If you are interested in finding out more about the BVCA documents or how we might be able to help your business with its next funding round or any other aspect of its growth journey, please reach out to Alex Lloyd, Andrew Mills or another member of our Emerging Companies team.