Armenia`s government plans introducing SAFE format 

ArmInfo.The RA government wants to introduce a new format for concluding an agreement - SAFE (Simple agreement for future equity). At a meeting on April 26, the RA National Assembly Commission on Economic Issues issued a positive  conclusion on the amendments to the law "On Joint-Stock Companies."

According to the Deputy Minister of Economy of the Republic of  Armenia Rafael Gevorkyan, this format of the agreement is most  beneficial for start-up companies, although there are no restrictions  for other players in this sense. In particular, under such an  agreement, the investor gives the startup money with the condition  that he will receive shares, usually at a predetermined price, when  certain stages are completed, for example, entering an IPO,  attracting new investments, etc. In the event of bankruptcy of the  company, the investor under certain conditions, will receive the  invested funds back.

Gevorkyan noted that such an agreement format is a fairly common  practice in the world.

SAFE implies the conversion of early investments into a block of  shares according to a similar principle, but does not imply the  application of an interest rate and does not have a "maturity  period".

The investor provides money to the project in exchange for an  obligation to allocate a proportional share of shares to it after the  startup is evaluated, the startup invests these funds in the  development of its solution and scales the business, increasing its  financial turnover, when the startup is ready for a new round of  financing, it seeks Series A investors and receives a valuation.  Based on the assessment received, the startup determines the current  value of its shares, and the investment amount is divided by the  value of the share, and the corresponding share is transferred to the  SAFE investor.

SAFE's capabilities allow you to flexibly customize the terms of the  agreement, protect yourself from many risks, and maintain your share  in the future. In the event of termination of the company's  activities, the SAFE investor receives back his funds in full (if  possible) or in proportion to his share. If the company is sold or  goes public, the SAFE investor receives an amount of money  proportional to his share of shares.