2) “charter” or “founding certificate”: when a new class of shares is created or the number of shares authorized increases, the company`s founding certificate must be amended to provide for such a change. The Charter is a publicly presented document that defines, among other things, the rights, preferences and privileges associated with the preferred action. For example, a charter may include anti-dilution provisions (protection of investors against future issuance of shares at a lower price per share than they purchased) and preferred shareholders often expect “guarantees” to be introduced. Guarantees require a majority vote of preferred shareholders to allow the company to freely implement certain measures, such as approving/issuing additional shares or amending the Charter or statutes. Together, these provisions allow preferred shareholders to effectively secure their position and ensure that their investments will not be diluted without their consent. 1. Share Purchase Contract (SPA): the instrument by which a shareholding is made available to the company by investors, usually in return for preferred shares. The BSG`s critical conditions include: (i) the purchase price of the preferred share; (ii) the number of preferred shares issued; (iii) representations and guarantees of the company and investors; and (iv) any commitments, commitments or closing conditions that continue to be made. In general, these documents are intended to reflect current practices and practices, and we have tried to determine where different regions differ in a number of their practices. However, one of our objectives in developing these documents is also to reflect “good practices” and avoid hidden legal pitfalls, even if it means that we must depart from current habits and practices. We have tried to avoid or at least draw attention to some problematic provisions that have become “market standards.” In general, we have tried to highlight these problems with a footnote and explicable language.
3. Investor Rights Agreement (IRA): The IRA generally sets registration rights, information rights and pre-emption rights for preferred shareholders, among others. “registration rights”: a contractual right to participate in a public offering of the company`s securities or the right to tax them. “Information rights” give preferred shareholders the right to access details of the company`s financial health. “Preemptive Rights” has granted some investors the right to acquire shares in a future cycle in order to protect their current holdings from dilution. 4. Voting agreement: this agreement generally provides for: (i) the composition of the company`s board of directors after the funding cycle, including the electoral/distance process; and (ii) drag-along rights. The “Drag-Along Rights” provide that, for certain authorized authorizations, all voting parties vote in favour of the sale of the company, accept the terms of sale and refrain from exercising any “derogatory rights”. Please note that you can use these resources for free at your own discretion. Please note, however, that you take full responsibility for the use of these documents. We are not your lawyers and we give no guarantee (explicit or implied) that the documents are good or legally enforceable. And documents that are not ours may have other constraints.
Among the many issues and decisions faced by founders preparing for a price capital financing cycle, the definition of the form of financing documents to be used is generally not one of them. For more than a decade, most venture capital transactions have been based on or derivative of the National Venture Capital Association (NVCA) standard financing documents.