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Series A Documentation

What is Liquidation Preference?

It determines who gets paid first and how much if the company is sold or liquidated. Series A investors typically get their money back (1x preference) before common shareholders.

Can I use Georgian law for Series A docs?

Yes, and for a Georgian entity, you must use Georgian law for the Charter and corporate actions. However, the SHA can sometimes be governed by foreign law if agreed.

What is a "Pay-to-Play" provision?

A clause that incentivizes investors to participate in future rounds; if they don't, they may lose certain rights or have their preferred shares converted to common stock.

How long does Series A legal due diligence take?

Typically 2-4 weeks, provided the company's data room is well-organized. It covers IP, employment, tax, and corporate history.

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3 min

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Series A Documentation: Legal Assurance for the Scaling Stage

Series A is the stage where a startup moves from idea validation to scalable growth. Investments raised at this time typically significantly exceed previous rounds, often amounting to millions of dollars. Consequently, the demands of investors (mainly venture capital funds) regarding legal documentation become stricter. Series A documentation is not just a set of contracts; it is the constitution of the company's management for years to come. At this stage, complex mechanisms are introduced, such as Liquidation Preferences, Anti-dilution protection, and a complex Board of Directors structure. Incorrectly drafted Series A documentation can lead to founders losing control of the company or blocking future investments.

Legal.ge gives you access to experienced corporate lawyers who specialize in venture deals and ensure the preparation of Series A documentation at the highest level.

Key Components of Series A Documentation

Series A requires an extensive package of documents. Key elements include:

  • Amended and Restated Charter: A document reflecting new classes of shares, special voting rights, and the composition of the Board of Directors.
  • Share Purchase Agreement (SPA): The main agreement regulating investment terms, Warranties, and liabilities.
  • Investors' Rights Agreement: A document granting investors rights to information, registration, and preemptive purchase rights.
  • Voting Agreement: Defines how parties elect directors and vote on key issues (e.g., sale of the company).
  • Right of First Refusal (ROFR) and Co-Sale Agreement: Restricts the sale of shares by founders and gives investors the right to participate in the sale (Tag-along).

Scenarios When Series A Documentation is Critical

This service is essential for the following situations:

  • International Expansion: When a startup plans to enter the global market and needs capital for marketing and sales.
  • Implementing Institutional Governance: When a company moves from "friendly" management to a formal corporate structure with independent directors.
  • Avoiding Down Rounds: Correctly drafting anti-dilution mechanisms when raising investment in difficult economic conditions.
  • M&A Preparation: Series A documentation often lays the groundwork for a future company sale ("Exit"), making the drafting of liquidation terms critical.

Georgian Legal Framework

The main guide when preparing Series A documentation is the Law of Georgia on Entrepreneurs. The new legislation is much more flexible and allows for detailed Shareholders' Agreements (SHA), which take precedence over the charter in internal relations. The law also regulates director liability and conflict of interest issues, which become relevant at the Series A stage.

Additionally, the Civil Code of Georgia and the Law on Competition may be relevant if the investment creates a dominant position in the market or concentration requiring notification to the Competition Agency. Regarding intellectual property protection, the Law on Copyright and Related Rights is important, as investors demand full assurance that the company owns all assets.

Process Stages

Working with a specialist selected on the Legal.ge platform proceeds as follows:

  1. Due Diligence Support: Preparing the Data Room and answering investors' questions.
  2. Drafting Documentation: Preparing documents based on NVCA (National Venture Capital Association) standards but adapted to Georgian law.
  3. Negotiations: Agreeing on each point (especially Valuation and Board Control) with the investor's lawyers.
  4. Corporate Approval: Preparing minutes of partners' meetings and Board resolutions.
  5. Closing: Signing documents, transferring funds, and reflecting changes in the registry.

Why Legal.ge?

A Series A deal is no place for experiments. You need a lawyer who understands not only Georgian legislation but also the language of international venture capital. Legal.ge connects you with exactly such professionals — people who have experience with deals of this scale and can protect your company's interests at the negotiation table. Find a qualified legal partner on Legal.ge.

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