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Bebyond • 1y
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.
LostBird :) • 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
See MoreChartered Accountant... • 9m
🌟 The VIP Pass of the Investment World: Unraveling PREFERENCE SHARES In the bustling world of investments, these shares are like the golden tickets that come with some extraordinary perks. In simple words, Companies need investments but may not wa
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