Zegal Managed Accounts

OVERVIEW

US$5,000,000.00+

Our client is a Hong Kong startup company developing a blockchain solution for financial institutions compliance. The team of the company is spread between Asia Pacific jurisdictions and Europe. The client’s Legal Counsel is based in London and does not have Hong Kong law background. As a startup company, they knew about Zegal offer of access to a library of Hong Kong legal and compliance templates, but they were looking for contextual guidance to use those templates.

They were also looking for advice in order to prepare their next two rounds of fundraising.

CHALLENGE

After onboarding our client and reviewing its constitutional documents, we had doubts on the validity of certain key provisions and conducted in-depth researches to validate our doubts and prepare a clear memorandum to our client explaining the issue and possible solutions.

We wanted to make sure our client understands the issue identified was material.

Since it was a new client, we had no history of working together and were very attentive to creating and using the right channels of communication with the CEO based in Hong Kong and the Legal Counsel based in London.

ACTIONS

We gave advance notice to our client of the issue identified and on-going researches. Once the memorandum was ready, we arranged to send it and invite both the CEO and Legal Counsel to a debriefing meeting at our office and by videoconference. During the debriefing meeting, we addressed questions and explored the possible solutions considered in the memorandum. Finally, it was the CEO who suggested a solution which could be implemented with minimal changes to the company’s constitutional documents.

OUTCOME

Since this constitutional issue could be sorted out, the relationship with this client has been ongoing on different basis, depending on the questions raised:

  • as part of the client’s subscription to the contextual guidance we provide with Zegal Managed Accounts, we provide regular help to the Legal Counsel to identify appropriate templates and general guidance on Hong Kong law; we conduct quarterly “health check” debriefings to review their legal and compliance needs with regards to Hong Kong law;
  • as part of our own packages offer, we have drafted the legal documentation for fundraising, including term-sheets for SAFE (Simple Agreement for Future Equity) and convertible notes, convertible notes agreement, creation of preferred shares and other provisions drafted in the articles of association, employee share option plan etc.