One of the trickiest things to do when you’re a founder of a startup is to make sure that you protect your rights when it comes to issuing shares and selling them. This can be a difficult process, particularly if you’re not familiar with the law in this area. Let’s look at some of the most common problems that can occur, and how LEGID can help you to protect your rights.
The first question that you should ask yourself is whether there is a shareholders agreement in place. This document can be vital in protecting your rights as a shareholder, and can also help to prevent disagreements between shareholders from arising. If there isn’t already a shareholders agreement in place, you should consider drafting one.
Another important question to ask is whether there are any reverse vesting provisions in the articles and/or shareholders agreement. These provisions can be used to protect your rights as a shareholder, and can also help to ensure that you don’t lose your shares if the company is sold.
Finally, you should also ask what rights the articles and shareholders agreement give you in relation to the shares. These rights can include the right to vote, the right to receive dividends, and the right to have information about the company. It’s important to make sure that you understand these rights, as they can be vital in protecting your interests as a shareholder. In addition, you should also check to see if there is an exit strategy implemented and whether all the shareholders are entitled and/or obliged to take part in it. This can be a vital protection for your rights as a shareholder.
How We Helped FinTech startup’s CTO Protect His Rights
When FinTech Startup’s CTO came to us, he was worried about his rights in the issuance of shares and a sale. He was concerned that he might not be getting the best possible deal for himself (which alludes to the exit strategy point mentioned above). We helped him to protect his rights in both of these situations and made sure that he was able to get the most out of the transaction.
We did this by drafting an option agreement review for him. This document clarified the terms of the agreement and made sure that he was protected in the event of any problems. We also helped him to structure the transaction to ensure that during the future exit, the sale of the shares belonging to him would happen in a way that was more beneficial for him financially. By using LEGID, he was able to protect his rights and get the best possible deal for himself.
If you’re the founder of a startup, it’s important to make sure that you protect your rights when it comes to issuing and selling shares. LEGID can help you to do this, so don’t hesitate to get in touch if you have any questions. Sign up today at www.legid.app.