We will enter into a number of legally-binding agreements with the company (and in some instances, with the other shareholders of the company) before funds are released to the company. These agreements are entered into on behalf of VentureFounders investors and their sole purpose is to protect the investments made by our investors.
The name, type and content of these agreements will differ depending on the investment but a description of the key legal rights that we will typically request on behalf of our investors is summarised below.
These are any rights that protect VentureFounders investors against dilution by subsequent share issuances. Two common examples are Pre-emption Rights and Veto Rights. Pre-emption Rights give the right to purchase the pro rata share in a subsequent share issue and Veto Rights give the right to veto any subsequent share issue.
Restrictions on the Transfer of Shares:
This gives the right to veto the transfer of shares of another shareholder to another person.
In the event that a certain number of shares are being sold by another shareholder, this gives the right to force the seller to buy its shares in the company as well.
Matters requiring Investor Consent:
The company is required to obtain consent before it is able to do certain things. For example, make any changes to the shares of the company and/or wind-up the company.
This gives the right to attend and talk at board meetings.
The company must provide accounting and financial records and business plans on a regular basis. The company is also required to provide us with any other relevant information that we may require during the lifetime of the investment. We then issue regular updates on the company to our investors via the website.
The company and its founders are asked to confirm certain facts and circumstances about the company and its business. These confirmations set out the factual matrix on which we have agreed to make the investment. If a statement is not true, it may entitle us to a damages claim.
This is not an exhaustive list and these rights may not apply to all VentureFounders investments. The extent of the rights granted to VentureFounders will depend the size of the VentureFounders investment and the number of other people and firms also investing.
If you have invested via the VentureFounders platform and you have any questions about which rights apply to your investments, please contact us directly.