What Is a Disclosure Schedule in a Series A, and What Happens If I Get It Wrong?

Your Series A financing is moving toward closing.

The term sheet has been signed, investor due diligence is almost complete, and your lawyer sends over the Stock Purchase Agreement along with another document you’ve probably never seen before.

The Disclosure Schedule.

At first glance, it looks like an administrative checklist.

You might even wonder whether it’s something your legal team can complete without much involvement from you.

In reality, the Disclosure Schedule is one of the most important documents in the entire financing. It allows your company to explain exceptions to the promises being made in the Stock Purchase Agreement and can play a significant role if disagreements arise after the investment closes.

What Are Representations and Warranties?

The Stock Purchase Agreement contains a series of representations and warranties.

These are factual statements your company makes to investors about its business before they complete the investment.

These statements commonly cover matters such as:

• Ownership of the company’s equity.
• Intellectual property ownership.
• Material customer and vendor contracts.
• Pending or threatened litigation.
• Tax filings and legal compliance.

Investors rely on these representations when deciding whether to complete the financing.

The Disclosure Schedule Lists the Exceptions

Very few companies are completely free of legal issues.

The purpose of the Disclosure Schedule is not to make the company appear perfect.

Instead, it identifies exceptions to the representations and warranties contained in the Stock Purchase Agreement.

If a representation states there is no litigation but the company is involved in a dispute, that matter should generally be disclosed in the Disclosure Schedule. Proper disclosure helps ensure investors understand the issue before closing rather than discovering it later.

A carefully prepared Disclosure Schedule protects both the company and its investors by creating a shared understanding of the business before the transaction is completed.

Every Disclosure Schedule Is Different

Founders sometimes ask whether they can start with another company’s Disclosure Schedule. But that approach rarely works.

Every startup has its own:

• Intellectual property history.
• Customer and vendor agreements.
• Corporate records.
• Litigation history.
• Ownership structure.

A document prepared for another company cannot accurately describe your business or identify your specific legal issues.

Founders May Also Have Personal Exposure

Many founders assume the company’s legal obligations end once the financing closes.

However, investors sometimes ask founders to stand behind certain representations personally, particularly in earlier financing rounds.

That means an inaccurate or incomplete disclosure may affect more than the company itself.

Understanding which representations carry personal obligations helps founders appreciate why careful preparation of the Disclosure Schedule is so important.

Preparing the Disclosure Schedule Takes Time

The best Disclosure Schedules are built from the company’s actual records rather than memory.

Preparing the document often involves reviewing:

• Corporate records.
• Cap table documentation.
• Intellectual property assignments.
• Customer and vendor agreements.
• Employment records.
• Outstanding disputes or claims.

Starting this process early allows founders to identify missing documents and resolve issues before closing rather than trying to reconstruct the company’s history under tight deadlines.

Full Disclosure Is Usually Better Than Partial Disclosure

Some founders hesitate to disclose issues because they worry investors may react negatively.

In many situations, the opposite is true.

Investors generally expect startups to have ordinary business issues.

What creates greater concern is discovering those issues after the investment has closed.

A complete and accurate Disclosure Schedule helps build trust, reduces uncertainty during negotiations, and lowers the likelihood of disputes arising from information that could have been disclosed before closing.

Common Founder Mistakes

• Treating the Disclosure Schedule as last-minute paperwork: This document often deserves the same level of attention as the Stock Purchase Agreement because it explains important exceptions to the company’s representations.
• Leaving out difficult issues to make the company look stronger: Proper disclosure often provides greater protection than attempting to hide known problems that investors may later discover.
• Copying another company’s Disclosure Schedule: Every business has different contracts, ownership history, intellectual property, and legal issues, making generic templates a poor substitute for company-specific disclosures.
• Assuming legal counsel already knows every exception: Founders are often the people most familiar with customer relationships, historical issues, and operational details that belong in the Disclosure Schedule.

10-Minute Disclosure Schedule Self Check

• Have all founders, employees, and contractors signed intellectual property assignment agreements?
• Can I identify every SAFE, convertible note, loan, and side letter currently outstanding?
• Do I know about any pending or threatened legal claims involving the company?
• Are all key customer and vendor agreements current and properly signed?
• Does my cap table match every stock issuance and option grant?
• Have I identified any promises or obligations that should be disclosed before closing?
• Can every disclosure be supported by the company’s records?

If you cannot answer yes to all of these, you have disclosure schedule work to do before you sign.

Bottom Line

A Disclosure Schedule is far more than a supporting document attached to the Stock Purchase Agreement. It explains important exceptions to the company’s representations, helps investors understand the business they are investing in, and can significantly reduce the risk of disputes after the financing closes. Preparing it carefully, accurately, and well before the closing date is one of the most valuable steps founders can take during a Series A financing.

Need Help Preparing Your Series A Disclosure Schedule?

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