It’s sometimes the case that you need to change terms and amend documents mid-fundraising. Here's how to handle that.
It’s sometimes the case that you need to change terms and amend documents mid-fundraising to accommodate a shift in negotiations or a late addition to the deal fundamentals. In these contexts, as a general rule if you’ve shared an agreement with counterparties and any number of them have already signed, then any new changes applied to the document from that point on will need to be agreed with them. This is in order to secure their agreement to the amendments applied since they signed and to confirm that they are still happy to retain their signatures affixed to the document in light of the recent edits.
How will I be notified if amending a term will affect a signed document?
If you’re currently raising a funding round or a SeedNOTE, whenever you change a term in the Key Deal Terms, the Advanced Terms or the Disclosure Letter Terms, if you have a document which is partially or fully signed and which will be affected by these changes, you will see a message alerting you that “Making changes to terms will affect a partially-signed/fully-signed document”.
How can I resolve this and make sure that my investors and shareholders agree to the changes?
If the above message appears, you should follow these steps to make sure your documents remain legally safe and sound:
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Download the current version of the Term Sheet, Shareholders Agreement, Disclosure Letter and Articles of Association (if you’re raising a Funding Round) or the SeedNOTE Term Sheet and SeedNOTE Agreement (if you’re raising a SeedNOTE) by opening the documents in your browser and clicking on the arrow in the top right hand corner (“Download PDF)”.
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Go back to the Key Deal Terms / Advanced Terms / Disclosure Letter Terms and make the changes you wanted to make - don’t forget to also click “Next” in the bottom right corner to save the changes. Once you've finished making all changes needed, the changes will be reflected across the agreements on the platform.
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Go to the Term Sheet, Shareholders Agreement, Disclosure Letter and Articles of Association (for the Funding Round) and the SeedNOTE Term Sheet and SeedNOTE Agreement (for the SeedNOTE) and download the new post-changes version of these documents, as you did in step 1 above.
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Go to My Documents from the left-hand panel, and choose “Compare documents” from the horizontal menu at the top. This function will allow you to compare the previous version of the agreement with the new post-change version. You should add the old version and the new version of each of the agreements to the Compare fields and click Compare. You will then see a redline side-by-side comparison showing the edits that have occurred as a result of your changes in the terms.
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For each such comparison which shows changes, you should copy the hyperlink of the comparison from your browser and circulate it by email to all parties who had already signed the affected agreements, and you should ask them to confirm by return email that:
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they agree to the changes;
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they are happy for the changes to apply retrospectively from the date they first signed the document - or, if earlier, from the date on the respective document; and
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they are happy for you to retain their signature on the amended documents.
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Once your investors and shareholders who had already signed confirm their acceptance of the new terms in writing over email, you can proceed to continue gathering other signatures or close the fundraising if all signatures have come in, on the basis of the amended agreements which have now been recognised as the most up-to-date agreed version of the deal documents.
Please note that you need to be very careful when changing terms of agreements that have already come into effect, especially if a term means that another party is worse off than it would have been under the original agreement - if this is the case, there may be extra steps required. This applies even if the other party has agreed to the change. As such, if you have any further questions about administering the process of amending a partially/fully-signed document, or your situation does not fit the description above - for example, because you want a change to apply from a custom date, please do not hesitate to contact our team through the chatbox and we’d be happy to help.