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Welcome to EQUITY ISSUES, a short note on a relevant issue in the private equity and venture capital industry.

If you would like to discuss any of the points we raise below, please contact me or one of our other lawyers.


Claire Cummings

020 7585 1406


BVCA model documents for venture capital investments

The British Private Equity and Venture Capital Association (BVCA) has published revised versions of its standard form documents for use in early stage venture capital investments, comprising standard form Articles of Association (Articles) and a model Subscription and Shareholders' Agreement (SSA). The BVCA has also now published drafting notes to accompany the Articles and the SSA.


In October 2014, the BVCA published a revised version of its model Term Sheet, SSA and Articles together with an accounting briefing on the treatment of preferred shares (as either debt or equity in the company’s accounts). In September 2015, the Articles were amended for changes to the Companies Act 2006 relating to the statutory requirements which applied to companies when undertaking share buy backs. In 2017, limited changes were made to the Articles and SSA, including those to address the PSC Register requirements and the language on deferred shares and drag-along.

The standard form documents have been drafted for use on a Series A funding round. They envisage a significant investment being made in whole or in part by fund investors. According to the BVCA, they are not suitable for seed investment.

Key changes to the Articles and SSA

Key changes to the standard form documents include:

  1. amendments to article 11 (Deferred Shares) of the Articles to clarify that the company may buy back, but may not redeem, Deferred Shares created by the conversion of Series A Shares;

  2. minor changes to article 22 (Drag-along) of the Articles to address the possibility of the Drag Consideration being paid other than in cash;

  3. the inclusion, in Schedules 4 (Completion Conditions) and 5 (Warranties) to the SSA of provisions relating to the requirement for companies to keep a register of people with significant control under Part 21A of the Companies Act 2006; and

  4. the removal from the main body of the SSA into a new Appendix B of provisions relating to US securities laws requirements and ERISA, plus the inclusion of new wording to address the "bad actor" provisions of Rule 506 of Regulation D under the US Securities Act of 1933.

Next Steps

The BVCA has asked for feedback on the revised documents ahead of its next review in 2018.

The standard form documents can be found here.

This document is for general guidance only. It does not contain definitive advice.


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25 05 2019

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