In most cases, it is the majority block of shareholders that decides whether and when the company goes public, and the minority bloc has no say in this matter. But a minority shareholder may also impose this measure if it has obtained registration rights. The procedure for drawing up an investor law agreement: the startup would be interested in granting these rights to investors in order to obtain an investment that they would not have obtained in other circumstances. The most common rights granted to investors by a company are as follows: a start-up wishing to guarantee the investment of venture capitalists or other venture capital institutions could choose to offer them certain rights, such as the right to the first offer, which allows investors to keep pro-rata its own ownership of the company if the company is listed on the stock market itself. , and the right to elect a representative to the Board of Directors. to obtain from time to time financial reports from the company. An agreement between investors and a start-up company that defines the investor`s rights as a shareholder of the company is referred to as the Investor Rights Agreement (IRA). Investors could negotiate for first-refusal rights and other rights that make investing a better deal for them. An Investor Rights Agreement (IRA) is a standard document negotiated between a venture capitalist (VC) and other companies that provide capital financing to a start-up. It grants the rights and privileges granted to these new shareholders within the company.
They generally cover issues such as share registration rights, „pre-emption rights“ or „pre-emption rights“ where additional actions are offered to the public and other rights that will soften the VC agreement. Investors who obtain only a minority stake in a narrow-owned company want this type of agreement to be put in place to protect their interests. Companies grant these rights because they benefit from an investment that otherwise would not see the light of day and make the agreement as attractive as possible to investors. It must also contain clauses that limit the parties` commitments, the terms of termination of the contract, applicable legislation and any other conditions that may be required by government, federal or international laws and conventions.