# Term sheet template

A4-portrait, 6-to-8-page formal term sheet, same render pipeline as the business plan (Playwright + img2pdf + qpdf). Lives at `html/prospectus/term_sheet.html`. The reference project produces a 7-page artefact: cover + 5 content pages + signatures.

## Page-by-page structure

| # | Page | Contents |
|---|---|---|
| 1 | Cover + preamble | Issuer (full Companies-House-filed legal name), document title, "Non-binding — confidentiality and exclusivity bind", preamble (round purpose, recipient self-cert reminder), introductory parties table (Issuer, Founders list, Investors, round size, minimum cheque, minimum aggregate, target first close) |
| 2 | Share economics &amp; use of proceeds | Instrument (ordinary £0.001 or £0.01 nominal, ranking *pari passu*), pre-money / post-money / dilution, issue price (computed from pre-money ÷ pre-investment shares), Round Share count, use of proceeds split, long-stop date, funds-expected timing |
| 3 | Cap table on closing | Holder / Role / Shares / % table; founders subtotal; Round Shares row; total = 100% / 625,000 |
| 4 | Governance &amp; shareholder protections | Board composition (director-designate per IN01), information rights (≥5% threshold), pre-emption, drag-along / tag-along, share-transfer good-leaver / bad-leaver, SEIS/EIS posture, confidentiality (binding), exclusivity (binding) |
| 5 | Closing terms | Governing law (English), expenses (each party bears own), founder IP assignment (deed at first close, no licence-back, no royalty), conditions to closing, long-form documentation timeline |
| 6 | Signatures | Company block (director-designate per IN01) + Investor block (name / entity / commitment / signature line) |
| 7 | **Appendix A — High Net Worth Individual Investor Statement** | FSMA 2000 (Financial Promotion) Order 2005 / FCA COBS 4 Annex 2 statement, verbatim. Income £170,000 / net assets £430,000 thresholds (post-31 Jan 2024 reverted thresholds). Checkboxes, declaration callout, signature lines. |
| 8 | **Appendix B — Self-Certified Sophisticated Investor Statement** | FSMA 2000 (Financial Promotion) Order 2005 / FCA COBS 4 Annex 4 statement, verbatim. Conditions A (PE / SME finance professional past 2yr), B (director of company with £1.6m+ turnover past 2yr), C (business-angel network member 6m+). Checkboxes, declaration callout, signature lines. |
| 9 | Backpage | Contact card (2×2 founder grid: role / name / email / phone) + confidentiality reminder + companies-house identifier |

## Cap table reconciliation

The cap table on closing **must reconcile against the IN01 + the Round 1 dilution model exactly**. The pattern from the reference project:

| Step | Source |
|---|---|
| Pre-investment shares (e.g. 500,000) | IN01 statement of capital |
| Per-founder pre-investment % | IN01 cap table |
| Dilution % | (Round size / post-money) = 350 / 1,750 = 20% in the reference project |
| Post-investment % per founder | Pre-investment % × (1 − dilution%) |
| Post-investment shares per founder | Pre-investment shares × (1 − dilution%) — note this only works if all founders dilute pro rata |
| Round Shares | New investor's post-investment % × total post-investment shares |
| Total post-closing shares | Pre-investment shares ÷ (1 − dilution%) |

Reference project numbers (pre 500k, dilution 20%):
- Joel 24.90% / 124,500 → 19.92% / 124,500 (no change in shares; dilution is via issuance of new shares)
- Adam 24.90% / 124,500 → 19.92% / 124,500
- Alex 20.00% / 100,000 → 16.00% / 100,000
- Jamie 15.16% / 75,813 → 12.13% / 75,813
- BackleyBlack 8.75% / 43,749 → 7.00% / 43,749
- Stewart Smalley 6.29% / 31,438 → 5.03% / 31,438
- Founders subtotal 500,000 / 80.00%
- New investors (Round 1) 125,000 / 20.00%
- Total post-closing 625,000 / 100.00%

Issue price = pre-money / pre-investment shares = £1,400,000 / 500,000 = **£2.80 per Round Share** (£0.001 nominal + £2.799 share premium in the reference project where nominal was £0.001; or £0.01 nominal + £2.79 premium if the term sheet sets nominal at £0.01).

## Doctrine

- **Issuer name is the IN01-filed legal entity.** Stale term sheets that reference a marketing or trading entity instead of the filed company are defects. The Companies House number on every page header should match the IN01.
- **Founder list reads exactly as the cap table.** Six holders on the cap table = six in the founder list. No phantom founders. Strategic shareholders (e.g. an investing LLP) ride in by entity name, not by their constituent individuals.
- **Sole director on IN01 is the director-designate on the term sheet's signature page.** A term sheet that names two directors when IN01 named one needs reconciling before issue.
- **SEIS/EIS posture is post-funding obligation, never closing contingency.** Never assured prior to distribution; no representation as to qualifying status. Forms no part of consideration.
- **Confidentiality + exclusivity bind; everything else is non-binding** until subscription &amp; shareholders' agreement.

## FCA self-certification appendices — sourcing the verbatim wording

Both appendices reproduce the FCA template **word-for-word**. Never paraphrase regulatory text. The FCA Handbook pages (COBS 4 Annex 2 / Annex 4) are JavaScript-rendered and not directly fetchable; the most reliable verbatim source is the **UK Business Angels Association** templated PDFs, updated whenever HM Treasury or the FCA change the thresholds:

- High Net Worth: <https://ukbaa.org.uk/wp-content/uploads/2024/02/HighNetWorthStatement.pdf>
- Sophisticated: <https://ukbaa.org.uk/wp-content/uploads/2024/02/SelfCertifiedStatement.pdf>

These are the **Feb 2024 versions**, reflecting the thresholds in force after HM Treasury reverted the January-2024 increases. Current thresholds:

| Statement | Condition | Threshold |
|---|---|---|
| HNW | A — income | £170,000 in last financial year (excludes one-off pension withdrawals) |
| HNW | B — net assets | £430,000 (excludes primary residence, loan secured on it, equity released from it, pension, insurance rights) |
| Sophisticated | A — PE / SME finance professional | last two years |
| Sophisticated | B — director of company | annual turnover ≥ £1.6 million, last two years |
| Sophisticated | C — business-angel network | member ≥ 6 months, still a member |

**Re-fetch before issue.** Thresholds change. The Feb 2024 templates were issued after HM Treasury reverted a Jan 2024 increase to £170k income / £430k net assets / £1.6m turnover (the original 2023 thresholds were £100k / £250k / £1m). The pattern: if it changes again, UKBAA reissues; re-fetch their PDF and re-render the appendix.

Render the appendices in the **same A4 stylesheet as the term sheet** but with a `.page--appendix` class that tightens `h2` (22pt instead of 26pt), `.form-question` margins (2.5mm instead of 4mm), and `.form-declaration` padding (3mm instead of 4mm). Without these overrides, the Sophisticated page (3 questions + 4 declarations + signature) overflows A4.

## Render

Same `render-pdf.mjs` pattern as the business plan; viewport 794×1123 (A4 portrait at 96 dpi), deviceScaleFactor 3.125 (300 dpi PNG), `img2pdf --pagesize 210mmx297mm`, `qpdf --linearize`. Output: `html/prospectus/term_sheet.pdf`.

## Common defects to avoid

| Defect | Fix |
|---|---|
| Issuer name mismatch (marketing vs filed) | Use the IN01 legal name verbatim on every page header |
| Founder list includes individuals also represented by an LLP holding | Use the LLP holding only; do not double-count |
| Issue price stated without showing the calculation | `£2.80 = £1.4m ÷ 500,000 pre-shares` in the issue-price row |
| Cap-table % rounding doesn't sum to 100% | Compute % as `shares / total` and verify the sum; never hand-enter % rows |
| SEIS/EIS implied as confirmed | "Pursuing SEIS/EIS Advance Assurance from HMRC is a post-funding obligation … not a closing contingency … no representation as to qualifying status" |
| Director-designate doesn't match IN01 | Read the IN01 PDF; the proposed director on IN01 is the director-designate |
