Term-sheet is a simple document that is non-binding. It contains information about the norms and conditions of a business agreement. Further many contracts can be prepared using this term sheet. The term sheet is validated by all the members of the agreement and even states the owner of different shares. Also, the amount invested by each member is written in it. At the time separation, the amount which has to be paid to the investors is also mentioned in the term sheet. In the short-term sheet is not so confidential document all it contains is the information about the business.
A term sheet includes –
- Investors with the amount of investment they have done
- Profit sharing
- Terms and conditions of the company and agreement did on
- Rights and obligations of different individuals
- Remedial actions
- Guarantee and warranty of services
WHY IS TERM SHEET NECESSARY?
The term sheet is necessary to maintain in a company because it has its own benefits which protect the individuals from any discrepancies. It is basically the story written on a paper which states all the terms and conditions of a business that are discussed earlier but are stated using this agreement known as a term sheet. All the required approvals like legal and corporate are taken on this sheet. it even has validations from the workers of the company and individuals associated in this agreement.
Benefits of a term sheet –
- It saves time – information can be written in short and saves a lot of time. It also contains even the minute details of the company hence it can be used as a reference document in case of need.
- Selling or Purchasing any shares – term sheet finds many uses while selling or purchasing shares as it has much important information written on it which can be considered while doing this decision. Not only in terms of buying you can make a separate term sheet to keep the record of your newly purchased share. The complex procedure can be made simple with a term sheet. Also, the seller and buyer would agree on this.
- Investment – after you have searched an investor for you, make him sign on the term sheet. This will validate the points you both agree on to. Remember the term sheet is negotiable thus, before making out to a final agreement you can still choose to update or modify the existing term sheet. Investment details are confidential hence these kinds of term sheets should be kept safe.
Not just selling or purchasing of shares but also for selling or purchasing of business, the term sheet is very important. Maintain it would be the best decision you can ever come on.
Qiklegal is a legal advisory branch that protects you from various frauds. Hence, to ensure the safety of your business we develop much documentation which may be required by you during your journey. These documents ultimately help you to run a business and smoothly and maintain your business connections preferably good. Choose only the best partner for your business, hence we the team of Qiklegal is there to support you in every phase of your business.