Legal rules relevant to start-up companies and VCPresentation Transcript
Legal rules relevant to start-up companies and VC
LLC OR PUBLIC LIMITED COMPANY – CORPORATION
DECISION MAKING AND GOVERNANCE
REPORTING AND AUDIT
ARTICLES OF ASSOCIATION
MANAGEMENT - 1 OR 2 TIER SYSTEM
DECISION MAKING PROCESS – REQUIRED MAJORITY
DIVIDENDS AND LOSS
THE PARTIES CAN REGULATE THEIR RELATIONSHIP IN MORE DETAIL
NO LEGAL CONSTRAINS
APPOINTMENT AND DISMISSAL OF KEY MANAGERS
APPROVAL AND CHANGES OF THE BUSINESS PLAN AND BUDGET
FINANCIAL CONTROL OVER THE COMPANY
CHANGES IN THE ARTICLES OF ASSOCIATION OF THE COMPANY
NEW ISSUES OF SHARE CAPITAL
SIGNIFICANT CHANGES IN THE NATURE OF THE BUSINESS
MAJOR ACQUISITIONS AND DISPOSALS
NON COMPETITION AND CONFLICT OF INTEREST
MATERIAL DEALINGS WITH INTELLECTUAL PROPERTY
DEALING BETWEEN THE COMPANY AND ITS SHAREHOLDERS
CHANGES IN THE STRUCTURE OF THE COMPANY (MERGER)
COMPANY SALE AND LIQUIDATION
RIGHT OF FIRST OFFER – If the company issues new shares in a future round, the original shareholder has the right to buy in pro-rata to maintain their ownership percentage.
RIGHT OF FIRST REFUSAL if one of the shareholders is trying to sell his shares to someone else, the other shareholders has the first right to buy those shares first.
DRAG ALONG: This is a right that enables majority shareholder to force minority shareholder to allow the sale of the company.
TAG ALONG : Other than where a transferor has exercised a drag along right, on any proposed transfer of shares which would result in a sale (consider again the appropriate triggers, e.g., >50% of shares or a transfer by key management of their stake), the other shareholders will have tag along rights to sell all/the same proportion of their interests to the purchaser.