Simple investments without a profit and loss structure do not constitute a business risk. 4. You will be careful to register the above agreement in order to avoid future legal problems in this regard. This memorandum of understanding made this _____________between ABC ____________day with his office at__________________, India referred to as “ABC” (which is the term “ABC Group” unless it is repugnant to the context or importance of serving and joining itself and other current shareholders of the __________________Pvt. Ltd. and their respective heirs, executors, directors and assignments) of a party and mr. XYZ with his office at_____________________. (Hereafter referred to as “XYZ,” the term “XYZ Group” unless they are repugnant to the context or importance of this group and do not include its nominees to the extent covered by this party and their heirs, executors, directors and beneficiaries of the assignment) of the SECOND PART; AND CONSIDERING that the parties intend to record in writing the terms of their agreement 2. In India, digitization is still only a prelude, for which it will be wise for you to execute and record the agreement by manually signing before the registrar.
Under Indian law, a written signature is not necessarily required for a valid contract – contracts are generally valid when legally qualified parties enter into an agreement, whether they accept verbally, electronically or in a physical paper document. The Information Technology Act, 2000, expressly confirms that contracts cannot be refused because they are concluded electronically. In order to prove a valid contract, parties sometimes have to present evidence in court. Leading solutions for digital transaction management can provide authorized electronic records under Section 65B of the Evidence Act, 1872, to support the existence, authenticity and valid acceptance of a contract. You can reach an agreement with all the terms of your deal by taking care of your interests and needs. 1. You have to make many legal bases for an investment of Rs.25 Lakhs in a start-up. 2) It is not necessary to register the investment agreement Whether you are an investor who wants to invest money in a start-up or an entrepreneur trying to bring financing to your project, it is important that you understand the terms of any investment. Any agreement on this matter may be reviewed by an expert prior to signing and legal advice must be available, including the need to record the facts. 6. It was agreed by mutual agreement that the company would not further dilute its own capital or the use of financial resources by any other person or would agree to assign shares to another person without the agreement of XYZ.
In addition, it was agreed that, without the agreement of the XYZ Group, ABC Group will only be able to sell the shares allocated to them in the event of an IPO or a second round of mutually agreed financing. If a second round of funding is required, this will be done by mutual agreement between the parties, and an IPO is expected to also be made and shares will be issued to the public. The parties agreed that a proportional dilution of the shares would be carried out for future funding rounds, as agreed upon. However, you can protect your interests, buy shares of the company with the investment money and become its director to ensure the return. While legal advice is of the utmost importance to ensure that any investment contract goes overboard, you still need to know what is being asked of you in order to decide whether such provisions are acceptable or not.