Aussie Angels is structured as a unit trust, which raises capital from investor unit holders and then deploys that capital into underlying startups.
The Trustee for Aussie Angels also acts as trustee for other trusts, which service different investors and different investments. When Aussie Angels participates in a startup, it is important that we ensure that our other investors (the investors not participating in this Deal) are not exposed to any liability associated with this Deal.
To achieve this, we require all documents entered into by Aussie Angels (including any investment documents) to include our standard limitation of liability clause, set out in Schedule 1.
This clause is market-standard for Australian trustees and is based on the standard form clause described by Diccon Loxton and Nuncio D’Angelo.
Schedule 1 – Limitation of liability clause
The Investor enters into and performs this agreement and the transactions it contemplates as trustee for Aussie Angels and in no other capacity. This applies in respect of any past and future conduct (including omissions) relating to this agreement or those transactions.
Under and in connection with this agreement and those transactions and conduct:
a) the Investor’s liability (including for negligence) is limited to the extent it can actually be satisfied out of the assets of the Fund referable to this agreement. The Investor is not required to pay any such liability out of other assets; b) another party may only do the following (but any resulting liability remains subject to this clause):
i. prove and participate in, and otherwise benefit from, any form of insolvency administration of the Investor but only with respect to relevant Fund assets; ii. exercise rights and remedies with respect to relevant Fund assets, including set-off; iii. enforce its security (if any) and exercise contractual rights against assets of the Fund to be established; and iv. bring any other proceedings against the Investor, seeking relief or orders that are not inconsistent with the limitations in this clause, and may not otherwise: v. bring proceedings against the Investor; vi. take any steps to have the Investor placed into any form of insolvency administration (but this does not prevent the appointment of a receiver, or a receiver and manager, in respect of relevant Fund assets); or vii. seek by any means (including set-off) to have a liability of the Investor to that party (including for negligence) satisfied out of any assets of the Investor other than relevant Fund assets.
Clause (2): a) applies despite any other provision in this agreement; but b) does not apply with respect to any liability of the Investor to the extent that liability arose because of the Investor’s own fraud, negligence or breach of trust which disentitles it to an indemnity out of the assets of the Trust in relation to that liability.
The Investor will not be liable under this agreement to the extent it ceases to be the Investor of the Fund.
The Investor is not obliged to do or refrain from doing anything under this agreement and any transaction or further acts contemplated by this agreement (including entering into any documents or incurring any liability) unless the Investor’s liability is limited in the same manner as set out in this clause.