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Funding Term Sheet for Pakistan

Funding Term Sheet Template for Pakistan

A Funding Term Sheet under Pakistani law is a preliminary document that outlines the key terms and conditions of a proposed investment in a company. It serves as a foundation for the subsequent definitive agreements while incorporating provisions compliant with Pakistani corporate law, securities regulations, and foreign investment requirements where applicable. The document captures essential elements such as investment amount, valuation, investor rights, governance structure, and exit mechanisms, all within the framework of Pakistani legal requirements and market practices.

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Funding Term Sheet

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What is a Funding Term Sheet?

The Funding Term Sheet is a crucial document in Pakistani investment transactions that precedes definitive agreements and outlines the fundamental terms of a proposed investment. It is typically used when companies seek external funding from investors, whether through equity, convertible instruments, or other investment structures. The document must comply with Pakistani legislation including the Companies Act 2017, Securities Act 2015, and relevant foreign investment regulations when applicable. While mostly non-binding (except for specific provisions like confidentiality and exclusivity), the term sheet serves as a roadmap for lawyers drafting final agreements and helps parties align on key commercial terms early in the negotiation process. It includes essential information about valuation, investment structure, investor rights, governance, and exit provisions, tailored to meet both local regulatory requirements and international investment standards.

What sections should be included in a Funding Term Sheet?

1. Parties: Details of the Company and the Investor(s), including full legal names and registration details

2. Background: Brief description of the Company, purpose of the investment, and context of the transaction

3. Definitions: Key terms used throughout the term sheet

4. Investment Amount: Total investment amount, tranches if applicable, and payment timeline

5. Valuation: Pre-money and post-money valuation of the Company

6. Investment Instrument: Type of securities being issued (e.g., preferred shares, convertible notes)

7. Key Terms: Core investment terms including pricing, rights, and preferences

8. Governance Rights: Board composition, voting rights, and major decision requirements

9. Exit Rights: Provisions regarding liquidity events, IPO, drag-along and tag-along rights

10. Confidentiality: Binding provisions regarding the confidentiality of the term sheet and negotiations

11. Closing Conditions: Prerequisites for completing the investment

12. Exclusivity: Period during which the Company cannot seek alternative investments

13. Binding Effect: Clarification of which provisions are binding and non-binding

What sections are optional to include in a Funding Term Sheet?

1. Anti-Dilution Protection: Protection mechanisms for investors against future down rounds, optional based on negotiation strength

2. Information Rights: Specific reporting requirements, included when investors require detailed oversight

3. Founder Vesting: Vesting schedule for founder shares, included when dealing with early-stage startups

4. ROFR and Co-Sale Rights: Right of first refusal and co-sale provisions, optional based on investor requirements

5. Employee Stock Option Pool: ESOP provisions, included when establishing or modifying employee stock options

6. Strategic Rights: Special rights for strategic investors, included when dealing with corporate investors

7. Shariah Compliance: Islamic finance provisions, included when required by investors or company policy

8. Foreign Investment Provisions: Special provisions for foreign investors, included when dealing with overseas investment

What schedules should be included in a Funding Term Sheet?

1. Cap Table: Current and post-investment capitalization table

2. Use of Funds: Detailed breakdown of how the investment will be utilized

3. Key Financial Metrics: Summary of important financial metrics and projections

4. Milestone Schedule: If tranched investment, details of milestones triggering subsequent tranches

5. Material Contracts: List of material contracts and commitments

6. Existing Encumbrances: List of existing charges, liens, and encumbrances

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Pakistan

Publisher

Ƶ

Document Type

Financing Agreement

Cost

Free to use
Relevant legal definitions














































Clauses


































Relevant Industries

Technology

Financial Services

Healthcare

Manufacturing

E-commerce

Telecommunications

Real Estate

Energy

Agriculture

Education

Retail

Infrastructure

Software

Biotechnology

Consumer Goods

Relevant Teams

Legal

Finance

Corporate Development

Executive Leadership

Investment

Compliance

Corporate Secretary

Business Development

Due Diligence

Strategy

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Investment Manager

Corporate Lawyer

Legal Counsel

Investment Banker

Venture Capital Partner

Private Equity Manager

Corporate Development Director

Business Development Manager

Financial Controller

Company Secretary

Compliance Officer

Managing Director

Board Director

Investment Analyst

Due Diligence Manager

Industries








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