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Investor Agreements
Expert legal assistance for investor agreements including ROFR, tag-along, drag-along, and anti-dilution provisions for startups
What is Investor Agreements?
📌 Overview
Investor agreements define the rights and protections for investors in a startup. HLAPL provides comprehensive legal services for drafting and negotiating investor-friendly agreements that balance investor protection with founder control.
✅ Key Aspects
Rights of First Refusal (ROFR), Tag-along rights (protecting minority shareholders), Drag-along rights (enabling majority exit), Anti-dilution provisions (full ratchet, weighted average), Pre-emptive rights, Information rights, Inspection rights, Veto rights on key decisions, and Board representation agreements.
⚖️ Legal Framework
Investor rights are governed by Companies Act, 2013, SEBI regulations (for AIFs), FEMA (for foreign investors), and the specific terms in Shareholders Agreement. Key provisions include veto rights under Section 188 for related party transactions.
Important FAQs
❓ What is tag-along right?
Tag-along right allows minority shareholders to "tag along" and sell their shares if a majority shareholder sells to a third party, ensuring minority shareholders get the same exit opportunity and price.
❓ What is drag-along right?
Drag-along right allows majority shareholders to "drag along" minority shareholders to sell their shares in a transaction, enabling a clean exit for acquirers. This is crucial for attracting strategic buyers.
❓ What is anti-dilution provision?
Anti-dilution protects investors from future down-rounds. Full ratchet (most founder-unfriendly) and weighted average (more founder-friendly) are the two main types. HLAPL negotiates balanced anti-dilution terms.
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