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Equity Issuance
Documents related to equity issuance in a startup are essential for managing ownership, investor agreements, and legal compliance. These documents outline how shares are allocated, transferred, and governed.
Key Documents for Equity Issuance in a Startup
- Stock Purchase AgreementA Stock Purchase Agreement (SPA) is a legally binding document that outlines the terms and conditions under which shares of a startup are bought and sold. It serves as a blueprint for ownership transfer and ensures clarity between the buyer and seller. Key Components of a Stock Purchase Agreement: • Definition of Terms – Clearly defines terms like "Shares," "Seller," and "Buyer." • Sale and Purchase of Shares – Specifies the number of shares being sold, the price per share, and the total purchase price. • Representations and Warranties – Both parties declare certain facts about the company and the... – Defines the terms under which shares are sold to investors, including price, rights, and obligations.
- Shareholder Agreement – Establishes shareholder rights, voting power, transfer restrictions, and dividend policies.
- Equity Incentive Plan – Governs stock options and grants for employees, detailing vesting schedules and exercise rights.
- Cap Table (Capitalization TableA capitalization table (cap table) is a detailed record of a startup’s ownership structure, listing all shareholders, their percentage of ownership, and the types of securities they hold. It is a crucial tool for founders, investors, and employees to understand equity distribution and dilution over time. Key Components of a Cap Table: • Founders' Equity – The initial ownership stakes of the startup’s founders. • Investor Shares – Details of venture capital firms, angel investors, and other stakeholders who have invested in the company. • Employee Stock Options – Shares allocated to employees through stock option plans. • Convertible Securities...) – Tracks ownership distribution, including founders, investors, and employees.
- Stock Option Agreements – Specifies terms for employee stock options, including vesting and exercise conditions.
- Share Certificates – Physical or digital proof of share ownership issued to shareholders.
- Convertible Notes & SAFE Agreements – Documents outlining convertible securities that may later convert into equity.
- Company Bylaws – Defines governance rules, including how shares can be issued and transferred.
These documents ensure transparency, protect investor interests, and help startups comply with legal regulations.
Written by Swedish Ventures, Rolf Olsson. Remarks to this article could be sent to glossary@swedishventures.se
ASO: DD-01-17
| ASO ID | DD-01-17 |