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I have a doubt let's take a company got recently funded in exchange of let's take 10% and it's going well and doing business also, after 5years company started declining almost came to shutdown the company. Now my question is : 1)Does company fou

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Saksham

Stealth • 9m

1. It depends upon the SSA, SSHA, SHA, SAFE and alike agreements that are drafted. In a general sense, the agreements are drafted in favour of the investors and the exit clause of the agreement is made where it's the company’s responsibility to provide an exit to the investor within a prescribed time. 2. No, the founders do not face any legal action in such scenario. In the eyes of law, the company and the founders are different entities and founders cannot be held liable for such cases. There is a principle "Lifting of the Corporate Veil" which provides cases where founders can be held liable. The mentioned case does not fall in that.

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