Raising investment is an exciting milestone for any startup, but it comes with legal paperwork that can make or break the deal. At MAR Legal, we understand that startup founders need clear, affordable, and reliable legal support, not endless jargon or inflated fees.
This guide sets out the key legal documents you’ll need when raising investment in the UK. Whether you’re speaking to angel investors or preparing for your first term sheet, we’ll walk you through what each document does, why it matters, and how we can help.
Why Legal Documents Matter to Investors
When investors put money into your business, they’re not just backing your product, they’re trusting your legal structure. Having your documents in place isn’t a formality. It’s essential to protect your business, secure funding, and avoid costly mistakes later.
A proper legal foundation also helps prevent disputes between founders, protect your intellectual property, and demonstrate professionalism to investors. In short: the right documents give investors’ confidence in you.
The Essential Legal Documents for Startup Investment
Here are the core legal documents you’ll need when raising capital in the UK:
1. Founders’ Agreement
Think of this as a prenup for co-founders. A Founders’ Agreement outlines each founder’s role, share of the company, decision-making powers, and what happens if someone leaves.
It typically covers:
- Equity split
- Vesting schedules (when shares ‘mature’)
- Decision-making rights
- IP ownership and assignment
- Exit clauses and dispute resolution
Without one, you risk disagreements turning into legal headaches, especially if a co-founder exits or disputes ownership.
📌 Need to put something in writing? We can create a tailored Founders’ Agreement that protects all parties fairly.
2. Articles of Association (Customised)
The Articles of Association define how your company is run. While many startups begin with the Model Articles from Companies House, investors often require a customised version with clauses covering:
- Share rights and classes (e.g. preference shares)
- Drag-along/tag-along rights
- Voting thresholds
- Transfer restrictions
You’ll need to submit your updated Articles to Companies House when issuing new shares or changing structure.
3. Cap Table (Capitalisation Table)
A cap table shows who owns what in your business and how that changes after investment. It tracks:
- Founders’ equity
- Option pools
- Existing investors
- Dilution following new funding rounds
A messy cap table can put off investors. We’ll help ensure your ownership structure is clear, accurate, and investor ready.
4. Non-Disclosure Agreement (NDA)
While many seasoned investors don’t sign NDAs, they may still be useful when sharing sensitive financial data or intellectual property with third parties or early-stage angels.
5. Term Sheet
A term sheet is a non-binding summary of the investment deal. It covers:
- Valuation
- Investment amount
- Share types
- Investor rights (e.g. board seats, information rights)
- Exit options
It sets the tone for the investment negotiation. A clearly drafted term sheet can help speed things up and avoid confusion later.
6. Subscription Agreement
This legally binding contract sets out the terms under which investors agree to purchase shares. It typically includes:
- Number and type of shares issued
- Investor warranties
- Payment and completion timelines
- Conditions to be met before closing
It’s one of the final documents signed before funds are transferred. We’ll help ensure it aligns with your company’s interests and the agreed terms.
7. Shareholders’ Agreement
Once an investor owns part of your company, you’ll need a Shareholders’ Agreement to set out:
- How decisions are made
- Rights of minority shareholders
- Reserved matters requiring investor consent
- Exit options (e.g. sale, IPO)
- Drag/tag-along rights
This document works alongside your Articles of Association to govern company operations and protect all parties.
8. IP Assignment and Employment Contracts
If your startup is based on proprietary tech, design, or branding, investors will want reassurance that your business owns all intellectual property.
Make sure:
- Founders and employees have assigned IP to the company
- Employment contracts contain proper IP and confidentiality clauses
We’ll draft and review everything to ensure your IP is protected before investors start asking questions.
9. EMI Scheme Documentation (If Applicable)
Want to attract and retain talent? Many startups offer tax-efficient employee share options under HMRC’s Enterprise Management Incentive (EMI) scheme.
To qualify, you’ll need:
- HMRC-approved valuations
- Option agreements
- Board resolutions
- Scheme rules
📌 Learn more on the HMRC website.
MAR Legal works alongside tax advisors and accountants to get your EMI scheme compliant and running smoothly.
Real Client Example: £750K Raised with Full Legal Support
A Manchester-based SaaS company came to MAR Legal seeking guidance before speaking to a local angel syndicate. They had no formal documents, a messy share structure, and multiple founders without clear roles.
We stepped in to:
✅ Draft their Founders’ Agreement
✅ Restructure their cap table
✅ Update their Articles to include drag-along and pre-emption rights
✅ Create a clean subscription agreement and term sheet
✅ Prepare a Shareholders’ Agreement aligned with investor requests
Outcome: They secured £750,000 in seed funding and the investor introduced them to two more backers.
How MAR Legal Helps UK Startups Get Investment-Ready
We know what investors are looking for—and what causes deals to fall through. Our experienced team provides approachable, fixed-fee legal support tailored to founders and early-stage companies.
What We Offer:
✔️ Startup Legal Pack
All essential documents, founders’ agreement, articles, shareholders’ agreement, term sheet, subscription agreement: custom-drafted for your company.
✔️ Cap Table & Share Structuring Advice
We’ll clean up your equity and help you present a clear ownership picture to investors.
✔️ IP and Employment Contracts
Secure your most valuable assets and ensure your team is contractually aligned with your goals.
✔️ EMI Option Scheme Setup
Tax-efficient option schemes drafted and registered in line with HMRC requirements.
✔️ Clear Pricing, No Jargon
We explain everything in plain English and agree fees upfront. No surprises, no hidden costs.
Speak to the Startup Legal Experts at MAR Legal
Raising investment doesn’t have to be overwhelming. With the right legal partner, you can approach investors with confidence and focus on growing your business.
📞 Call us on +44 (0)161 491 3933
📩 Email: info@marlegal.co.uk
📍 Based in Manchester, advising startups across the UK and the Middle East
Schedule your initial consultation today and get expert legal support that’s fast, affordable, and friendly.
Disclaimer: This post is for informational purposes only and does not constitute legal advice. For specific guidance, please speak with a member of our legal team.