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Bebyond • 11m
Demystifying the Ownership Structure Clause in Shareholder Agreements (SHA)📍 The Ownership Structure clause in your SHA is crucial. Here's why: 1. Defines Equity Distribution: It outlines who owns what percentage of the company. This impacts decision-making power and profit-sharing. 2. Sets Vesting Schedules: Protects the company if a founder leaves early. Typically, the shares veet over 3-4 years with a 1-year cliff. 3. Clarifies Share Classes: Different classes (eg, common, preffered) have varying rights & privileges. 4. Addresses Future Dilution: Specifies how ownership percentages may change wirh new investments. 5. Outlines Transfer Restrictions: Prevents unauthorized selling of shares, protectijg the company's integrity. 6. Details Drag-Along/Tag-Along Rights: Crucialbfor potential company sales or additional investment rounds. 7. Establishes Preemptive Rights: Gives existing shareholders first "dibs" on new share issuances. Act now! Secure your Starup's Future.
Honorary Mentions - ... • 1y
Starting a startup is exciting, but understanding the shareholder agreement (SHA) is crucial. Today, let's focus on Dilution. What is dilution? Imagine you and a friend each own half a pizza (50% each). If you bring another friend in and share more
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We've covered dilation and the Board of Directors(BOD). Now, let's delve into Tag-Along Rights—An Essential Topic Imagine your startup takes off! A major player wants to buy the company, and your majority shareholder is ready to cash in. But what ab
See MoreHonorary Mentions - ... • 1y
As a founder, your startup is your baby. But what about when that Golden Exit opportunity appears? Drag-Along Rights in your Shareholder Agreement(SHA) are crucial for ensuring a smooth acquisition process. What are Drag-Along Rights? They empower
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