Preparing the Document Set for an Investment

Create a transaction map before collecting documents

An investment document map is an index of the proposed transaction, the documents being discussed and the decisions still open. Start with the investing and receiving entities, the intended investment amount, the proposed instrument and the transaction stage. Identify whether the discussion concerns a first investment, a follow-on round or an exit. Similar document names can serve different functions across transactions, so the commercial context matters.

Distinguish a term sheet from the full document set

Record the terms currently under discussion and identify which version of the term sheet is being used. Do not infer the effect of a term solely from the document’s title or a label such as non-binding. The wording and relevant circumstances require review. Counsel should see any confidentiality, exclusivity, costs or dispute provisions, as well as the commercial points, when advising on the next step.

Connect ownership records and transaction documents

Prepare the current cap table and the assumptions used for any proposed post-investment version. Include existing shareholder arrangements, constitutional documents and earlier investment instruments. Flag options, convertibles or other interests that may affect the ownership picture. Distinguish an agreed number from a working assumption. This helps the team identify where the proposed transaction needs further information or reconciliation.

Track diligence requests and decisions separately

Use one log for requests for information and another for negotiation decisions. A missing document is not the same as an accepted commercial risk. For each request, identify the responsible owner, version, status and next action. For each decision, record the issue, proposed position and person authorised to decide. Keep legal, financial and tax work coordinated without assuming one review covers every discipline.

Prepare a closing checklist with the advisers

Identify the contemplated signing and completion steps and the documents or approvals that the advisers say are relevant. Assign owners and identify dependencies. Do not treat a template checklist as a statement of all approvals required for a particular investment. Changes in structure, parties or timing may change the work. Maintain a dated record of outstanding matters and clearly separate signed documents from drafts.

Use a controlled transaction record

A fictional investment folder might contain a transaction summary, current cap table, term sheet, diligence requests, negotiation issues and a closing index. Restrict access according to the agreed process and retain an audit trail of important versions. The objective is to make it possible for the team to identify the current position without relying on scattered emails. A well-organised folder supports the advice; it does not establish that the investment is ready to close.

Identify rights that need coordinated drafting

Investment documents may address economic participation, information, governance, transfers and exits. The commercial brief should identify the proposed position on each relevant issue and show where it is intended to appear. Read the documents together. A defined term, approval mechanism or event described differently in two agreements can create an important question even where each draft appears complete in isolation.

Preserve the distinction between signing and completion

Record whether the proposed transaction distinguishes signature from the later completion of agreed steps. Identify the documents and decisions relating to each stage, without treating a template sequence as the correct process for every investment. Counsel should consider changes in facts between those stages and the proposed treatment of outstanding matters. At closing, retain executed documents and evidence of completed actions rather than replacing the request log with an unsupported statement that everything is done.

References

• Companies Act, 2013 — India Code