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What’s new in the 2023 edition of the Startup Estonia model documents?

On 19 June 2023, Startup Estonia published the result of the joint effort of attorneys representing the law firms most actively engaged in working with and for the Estonian startup community – the 2023 edition of the Startup Estonia / EstVCA model documents. Here’s a brief summary of what’s new.

  • The Founders’ Agreement, Shareholders’ Agreements, and Option Agreement now include a possibility of the founder or optionholder becoming a Voluntary Leaver (in addition to Bad Leaver and Good Leaver).
  • The Seed Shareholders’ Agreement (and the associated Articles of Association) now have two flavours — one with the supervisory board and one without it.
  • The Convertible Loan Term Sheet and Convertible Loan Agreements now have Discount instead of the formerly used Discount Rate (which equalled 100% minus the Discount), and the formulas have been adjusted accordingly. Additionally, a slightly simplified Convertible Loan Agreement can be used when there’s only a single convertible investor.
  • The thoroughly rewritten IP Assignment and License Agreement now takes into account the facts that most startups deal with IP in software, which is not a monolithic creation, but rather a complex bundle containing tailor-made parts (“Foreground IP”), elements reused from the same contractor’s earlier projects (“Background IP”), third-party components (“Foreign IP”) and, possibly, items originally belonging to the client and having been modified upon request of the client (“Company IP”).
  • The model Employment Agreement has been amended to reflect the recent changes of the Employment Contracts Act.
  • There is now also a Mutual Non-Disclosure Agreement that should be used in projects where both parties disclose confidential information to each other.
  • The updated Spousal Consent / Spousal Agreement now comes with alternative wording designed for the cases where the married founder holds his/her shares through a holding company.
  • A Simple Cap Table that an early-stage startup can use to model simple equity-only investment rounds.
  • On top of these, most documents also received a host of formatting updates, including the use of (mostly) same style set, and (mostly) consistent use of the form fields in marking the user-fillable parts, optional elements, and multiple choices in the text. The only documents left untouched in the 2020 edition are the Postmoney SAFE, the original Cap Table, and the Legal Due Diligence Checklist.

The updated documents are available free of charge to all founders and investors from the familiar location – Should you need more information, feel free to contact the attorneys of TRINITI’s startup practice group.