How to close your round on SeedLegals

The Shareholders Agreement is signed. Here's what to do next.

WHERE YOU'RE UP TO SO FAR...

We'll start this article at the point that:

• The Term Sheet is signed.

• The Disclosure Letter and Shareholders Agreement are signed by all.

• The investors and shareholders have all reviewed the Articles.

Congratulations, you're almost done!

So, here are the remaining steps to close your round:

1) GET THE MONEY IN

Formally, the right time to ask your investors to send their money is after everyone has signed the Shareholders Agreement. But, sometimes you need the cash, and anyway sometimes investors will jump the gun and send you the money the moment they’ve signed.

So, a common question is “Can I take the money sooner?”.

And the answer is yes, you can take money from each investor immediately after they have signed the above documents (we don’t recommend taking their money before they’ve signed because you run into problems if they don’t agree to the terms, or want a change made, and then things get messy).

If you do start getting money in before everyone has signed you should note that if for some reason the round doesn’t go ahead – for example a major investor decides to pull out – then the other investors may want to pull out, and any who have paid may ask for their money back. So don’t spend it yet, or at least don’t spend more than you can pay back, until everyone has signed.

• If you’re doing an SEIS & EIS round then the Shareholder Agreement will automatically contain wording to close the round in two tranches, with the SEIS shares being issued first and the EIS and non-SEIS shares after that. You don't need to worry about anything here, the platform sorts that automatically for you so long as you use Funds Tracker to track the investments.

2) USE FUNDS TRACKER TO TRACK THE INVESTMENTS

As each investment comes in, go to the Funds Tracker module on your funding round page, and enter the date that each investment was received.

It's really important that each date is set to the actual date the corresponding investment was received, as we'll then date the share certificates and SH01 form for Companies House to show the shares were allocated based on those dates.

• The SEIS rules state that the SEIS shares need to be issued at least a day before any EIS shares. By using the Funds Tracker module and entering the date that each investment is received, the platform will have enough information to date all the SEIS shares the date the last of the SEIS funds were received, and the EIS and any non-EIS shares the date the last of those funds were received, or at least one day after that.

• You can get the funds paid in any order, we'll make sure the shares are correctly dated once all the funds are in.

If you have SEIS or EIS investments then it's super important that all shares be fully paid up, and payment received in the company bank account before the shares are issued. HMRC will take the date on the SH01 as the date that the shares were issued.

3) CREATE YOUR BOARD RESOLUTION TO APPROVE THE ROUND

Complete the Board Resolution document on SeedLegals.

You’ll need to convene a board meeting in accordance with your Articles (which could just be a Skype call with the other board members), and then a director should sign the Board Resolution. Easy.  

SeedLegals will automatically date your board meeting based on the date the first of the funds were received,  according to what you specified in Funds Tracker, or the date on the Shareholders Agreement - whatever is earlier.

4) DO A SHAREHOLDERS RESOLUTION TO ADOPT THE NEW ARTICLES

You may have noticed that the Articles aren't signed by anyone. Instead, they are 'adopted' by a majority of the existing shareholders signing a Shareholders Resolution.

• So, your next step is to get 75% of the existing voting shareholders (by number of shares held) to sign the Shareholders Resolution.

• Any shareholders who have non-voting shares are excluded from signing and excluded from the 75% calculations, so no need to contact them.

• Once you have a 75% majority (which usually means the founders plus a few of the larger other shareholders) you're done, there's no need to wait for everyone else to sign. It's not legally required that everyone signs, but it does look nicer, so if it's not too much effort to get everyone to sign, and it's not going to unnecessarily hold up closing the round, sure, you might want to push everyone to do so.

SeedLegals will automatically date your shareholder meeting based on the date the first of the funds were received,  according to what you specified in Funds Tracker, or the date on the Shareholders Agreement - whatever is earlier. This will be dated the same as your Board Resolution!

5) SIGN THE SH01 FORM

The SH01 form is a document you'll send to Companies House to tell them that you've issued more shares. We automatically create this for you, all you need to do is sign it, easy.

6) CONTACT SEEDLEGALS TO CHECK EVERYTHING

Getting everything dated correctly is super-important, particularly if you have SEIS and EIS in the round. We're here to help, it's all included.

So, when you get to this stage stop, hit the chat button, and we'll hop in and check everything.