A liquidation preference clause is usually incorporated into a shareholders agreement by a professional investor (such as a business angel or venture capital firm) as a risk reduction tool in case the business fails but still has value in it, or to … [Continue reading]
Observer Rights
In a young business, the founders are likely to be both the owners and the managers of the business – the shareholders and the directors. How decisions are made differs between the board meeting and the members’ meeting. The directors of most … [Continue reading]
Deadlock Provisions
What are these clauses? Deadlocks provisions are terms that are incorporated into shareholder agreements in order to provide methods for resolution of issues over which owners cannot agree. Because we are dealing with shareholder agreements, … [Continue reading]
Why Founders Should Insist On Tag Along Rights
Should you include a tag along clause in your shareholder agreement? More and more founders are insisting on including tag along clauses in their shareholder agreements. The following is a quick explanation of what one is, and why you might use … [Continue reading]
Right Of First Offer Term
What is a right of first offer clause and why include it within a shareholder agreement? Such a clause confers a right to existing shareholders to subscribe for a new issue of shares before outsiders can do so. Simply put, it allows an existing … [Continue reading]