In case a company does not have sufficient funds to make investments or to cover the costs necessary to carry out its activity, it may request financing provided by credit institutions, non-banking financial institutions, financing being a way of mobilizing resources faster than obtaining the necessary capital from the cash flow of the respective company. In addition to traditional forms of financing, startups and SMEs have started to utilize an alternative form of financing – crowdfunding.
Crowdfunding is a form of raising funds, through the use of internet platforms, in which project initiators present ideas to potential investors. Crowdfunding has the potential to help investors (private investors, business angels, and even venture-capital funds) find projects that need funding and, as a result, allows project initiators to find investors to finance the growth of their projects.
Both traditional forms of financing and crowdfunding are facing various challenges such as ever-changing regulations, increasingly complex contractual issues, and compliance requirements.
By using legal services both for regulatory issues and for negotiating agreements, the companies wishing to obtain financing, as well as the credit institutions, the non-banking financial institutions, the investors are assuring the success of their projects, by eliminating or reducing legal risks.
NewLegalWay provides legal consultancy on Financing and Crowdfunding related to the following aspects:
- Legal advice on financing/refinancing granted by credit institutions, non-banking financial institutions: loan agreements and related guarantees (bilateral loan agreements, structured loan agreements, ceilings including letters of credit/ LCs and letters of guarantee/LGs, loans granted by multiple creditors – club deals and syndicated facility agreements, Intercreditor Agreements;
- Legal assistance on movable mortgage agreements over accounts/ receivables/ receivables from lease agreements/ shares/ shares listed on BVB, mortgage agreements over immovable assets, personal guarantee agreements, corporate guarantees, subordination agreements;
- Financial leasing contracts, factoring contracts (including reverse factoring contracts and the relationship with large retailers);
- Due diligence analysis of the assets to be mortgaged in favor of the creditor/creditors, the agreements related to the receivables to be mortgaged or assigned, the existing financing agreements and shareholder loan agreements;
- Financial assistance related to financing scheme to be implemented;
- Drafting and amending the financing/credit documentation: Indicative Terms and Conditions, Binding Terms and Conditions related to the envisaged financing, Engagement Letter, Confidentiality Agreement/Non-Disclosure Agreements-NDAs, Intercreditor Agreements, Addenda to loan agreements and guarantees, Notifications on mortgages;
- Legal opinions on capacity and authority (in cases where the borrower, the guarantor is incorporated in Romania and the creditor is abroad);
- Statutory decisions (resolutions of the General Meeting of Shareholders / Associates, decisions of the Board of Directors) regarding the conclusion of the agreements with the creditors/financing parties;
- Legal advice on Conditions Precedent (CPs) in relation with the utilisations of the loans;
- Legal advice on the borrower’s obligations under credit/factoring / financial leasing contracts and the consequences of their non-fulfillment;
- Novation contracts (by changing the creditor or the debtor), receivables assignment agreements;
- Notices regarding the early termination and legal advice on the enforcement procedure.
- Legal advice on different types of crowdfunding (investors on the crowdfunding platform, co-invest structures including both business angels and venture capital funds) depending on the stage of the startup/company (pre-seed, seed, bridge, funding series A, B);
- Legal advice on the shareholding structure (Cap Table) of the startup/company concerning the financing rounds, the legal form of the company, the documents related to the project and due diligence;
- Legal advice on the financing’s implementation options based on investors’ typology and the financing structures utilized by various crowdfunding platforms (either by using a special purpose vehicle/SPV, owned by all investors and the respective SPV is acting as a shareholder in the startup / the company, either the investors become direct shareholders of the startup/company by assignment, issue of shares, preferential shares, share capital increase by loan conversion or the company issues bonds);
- The service contract for the listing on the crowdfunding platform;
- Termsheet, Shareholders Agreement, articles of incorporation of the startup/company, legal advice related to the SPV in which the investors will hold shares (the documents for the incorporation of the respective SPV) and the future relationship between the SPV (as a shareholder) and the startup/company, the decisions of the General Meeting of Shareholders (GMS) of the startup/company – for the implementation of the financing structure through SPV;
- The prospectus, the share subscription forms, statements, articles of incorporation, Shareholders Agreement, GMS decisions, share capital increase and registration with the Trade Register, the agreement with the electronic register of shareholders – for the implementation of financing structure by share capital increase.