Tag Archives: shareholder agreements

Venture Capital Shareholder Agreements – More Attention Now, Less Heartache Later

It’s an exciting time for a client when a venture capital investor (VC) comes onto the scene. Company founders work hard to find financing. When big money and an attractive valuation are proposed, it’s hard for them not to get caught up in the moment. But financing always comes with strings attached. Clients need to be aware. Show me the money! (But give me a reasonable shareholder agreement too.)

“Investor Rights Agreement,” “Right of First Refusal and Co-Sale Agreement,” the simple “Side Letter” are all different varieties of shareholder agreements. Whatever the shape and size, a shareholder agreement can contain a broad variety of potential tricks and traps.

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Shareholder Agreements – Terms, Tricks and Traps for the Unwary

It’s an exciting time when a VC comes onto the scene. Founders work hard to find financing. When big money and an attractive valuation are proposed, it’s hard not to get caught up in the moment. But financing always comes with strings attached. Be aware. Read the shareholder agreement!

“Investor Rights Agreement,” “Right-of First Refusal and Co-Sale Agreement,” the simple “Side Letter” are all different varieties of shareholder agreements. Whatever the shape and size, a shareholder agreement can contain a broad variety of potential tricks and traps.

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Unanimous Shareholder Agreements and Section 137 of the Business Corporations Act (British Columbia): A Comparison

By Maggie Cavallin

Shareholder agreements are a frequently used tool when individuals or companies establish a new company or invest in an existing company. In general terms, a shareholder agreement is a contract between two or more shareholders of a company and often the company itself, which supplements and is subject to the articles of the company as well as the relevant corporate legislation. Among other things, such agreements typically seek to establish the basic entitlements and obligations of the respective parties in relation to the management of the business of the company, fundamental changes or major decisions, share transfers, changes in ownership of the corporation, the resolution of disputes among shareholders, exit mechanisms for shareholders that wish to sell their shares, and the protection of minority shareholders.

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