Structure and Ownership Assessment

Will your ownership record survive investor diligence?

Fourteen questions about the company investors will buy, the ownership record behind it, employee equity and control. In five minutes you see what could stop a round, what could slow it down, and who has to fix it.

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Written by Gennady Shafir, a CFO and board advisor in Abu Dhabi who works on cap tables, governance and cross-border structure for companies raising in the UAE and Europe. The questions are the ones that come up on the other side of the table.

Why this assessment exists

The company investors will buy

Where is the company investors will buy shares in registered?UAE mainlandA UAE free zone other than ADGM or DIFCADGMDIFCLuxembourg, SARLLuxembourg, SAAnother European countryUnited States, DelawareOffshore, such as Cayman or BVINot decided yet

How is the group put together?One company onlyA holding company and an operating companyA holding company, an intermediate holding company and operating companiesMore layers than that, or we are not certain of the exact chain

Where is the product and the intellectual property held?In the company investors will buy shares inIn another company we own, with signed paperwork covering who owns it or who may use itIn another company we own, with nothing signed between themIn a founder's name, or with a contractorNot sure

Who signs customer contracts and receives the money?The company investors will buy shares inOther companies in the group, with signed paperwork between themOther companies in the group, with nothing signed between themIt varies, and I could not explain the patternNot sure

Do you have companies that exist mainly to hold a licence, visas or a bank account?NoYes, and their filings and accounts are up to dateYes, and some are behind on filings or accountsNot sure

The ownership record

Where is the company's legal register of shareholders kept?The company or its corporate services provider maintains itAn equity platform is used as the legal registerWe have a cap table, but I do not know whether it is the legal registerThere are several versions in different placesNot sure

When did someone last check that the record matches the signed documents?In the last twelve monthsLonger agoNeverNot sure

Do all outstanding SAFEs, convertible notes and side letters follow one set of terms you understand?None are outstandingYes, and someone has worked out what they convert intoThey use different caps, discounts or side termsThey have never been worked through togetherNot sure

Has anyone been promised equity, in writing or verbally, that does not appear in the cap table?NoYesNot sure

Employee equity

Is there an option pool set aside with a written plan behind it?Yes, a pool is set aside and there is a written planA pool has been discussed or shown in the cap table, but there is no plan documentNothing yetNot sure

Have employees signed individual option agreements setting out vesting and what happens if they leave?Everyone who was promised options has signedSome haveNobody hasNo employee options existNot sure

Findings

Issues

Points to verify

Where to start

This check looks at fourteen things. A real review looks at the documents behind them, which is not something a form can do.

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MENADD provides general information, not legal, tax or investment advice.