Investment contracts are very complex financial instruments. As with any investment, they are not without risk. They generally contain provisions that limit their ability to provide distributions of contractual value in certain circumstances. When evaluating investment options, it is very important to fully understand the risks and circumstances. As a general rule, investors will have a minority stake, i.e. together they will hold less than 50% of the company`s shares after the completion of an initial investment. Historically, however, it is not uncommon for investors to quickly hold a majority stake in life sciences companies, especially when the company needs more than one round of investment because of the size of each investment and the amount of money often required to develop a life sciences company`s products. Under English corporate law, many shareholders` business can be decided either by the majority of shareholders or by at least 75% of the shareholders. In the investment agreement, there may be a provision that indicates the intention of the parties to try to withdraw, for example. B a listing of the company on a recognized exchange or a sale of the company within a specified period (usually 3 to 5 years). This intention is generally related to the recognition that an investor will not provide any guarantee or compensation for the company`s operations and business in the event of an exit, along with other guarantees as to its ability to sell its shares.
An investment contract should describe the terms of the investment and what the investor receives in return. Preferential trade and investment agreements (PTIA) are broader economic agreements between countries concluded to facilitate international trade and the cross-border transfer of inputs. These may include economic integration agreements, free trade agreements (FAs), Economic Partnership Agreements (EPAs) or other similar types of agreements covering, among other things, foreign investment provisions. In PTIA, the foreign investment section is only a small part of the contract, which usually includes one or two chapters. Other topics covered in the PTIA include trade in goods and services, tariffs and non-tariff barriers, customs procedures, specific rules for certain sectors, competition, intellectual property, temporary entry of people and much more. PTIA follows trade and investment liberalization as part of this broader priority.