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Venture Capital Shareholders Agreement Template for United States

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Key Requirements PROMPT example:

Venture Capital Shareholders Agreement

"I need a Venture Capital Shareholders Agreement for a Series B investment round of $10M into my healthcare tech startup, with specific provisions for board seats and anti-dilution protection for the lead investor who will take a 25% stake in March 2025."

Document background
The Venture Capital Shareholders Agreement is essential when a company receives venture capital investment in the United States. It serves as the primary document governing the relationship between investors and the company, typically implemented during Series A or later funding rounds. The agreement addresses crucial aspects such as investor rights, corporate governance, share transfer restrictions, and exit provisions. Given the complex regulatory environment in the U.S., including federal securities laws and state-specific requirements, this agreement must carefully balance investor protection with company flexibility while ensuring compliance with applicable regulations.
Suggested Sections

1. Parties: Identification of all shareholders, including the venture capital investors and existing shareholders

2. Background: Context of the investment and purpose of the agreement

3. Definitions: Key terms used throughout the agreement

4. Share Capital and Classes: Details of share structure, classes, and rights attached to each class

5. Board Composition and Management: Structure of the board, appointment rights, and management provisions

6. Transfer Restrictions: Limitations on share transfers and right of first refusal

7. Tag-Along and Drag-Along Rights: Exit provisions for minority shareholders and majority forced sale rights

8. Pre-emptive Rights: Rights of existing shareholders to maintain ownership percentage in new issues

9. Information Rights: Shareholders' rights to company information and financial reports

Optional Sections

1. Anti-Dilution Protection: Protection against value dilution in future rounds - typically included when investors require protection against down rounds

2. Liquidation Preference: Priority rights in case of liquidation or exit - typically included when preferred shares are issued

3. Dividend Rights: Special dividend provisions for different share classes - included when different dividend rights are attached to share classes

4. Vesting Provisions: Vesting schedule for founder/employee shares - included when founder/employee shares are subject to vesting

Suggested Schedules

1. Schedule 1 - Cap Table: Current and pro-forma capitalization table

2. Schedule 2 - Articles of Association: Company's constitutional documents

3. Schedule 3 - Investor Rights: Detailed investor rights and privileges

4. Schedule 4 - Board Resolutions: Relevant board approvals for the investment

5. Schedule 5 - Business Plan: Company's business plan and financial projections

6. Schedule 6 - Warranties: Detailed warranties given by the company and founders

7. Schedule 7 - Share Transfer Form: Template for share transfers

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Industries

Federal Securities Laws: Core federal regulations including Securities Act of 1933, Securities Exchange Act of 1934, Investment Company Act of 1940, Regulation D (Rules 506(b) and 506(c)), and Rule 144 for restricted securities

Blue Sky Laws: State-specific securities laws covering registration requirements, disclosure obligations, and exemptions that vary by state

Corporate Law: State-specific corporation laws, particularly Delaware General Corporation Law if incorporated in Delaware, and relevant LLC laws if applicable

Tax Laws: Internal Revenue Code, state tax regulations, tax implications for different share classes, and tax treatment of stock options and convertible securities

Employment Laws: Regulations governing employee stock ownership provisions, stock option plans compliance, and ERISA considerations

Antitrust Laws: Hart-Scott-Rodino Act, Clayton Act, and Sherman Act provisions regarding competition and market concentration

Corporate Governance: Sarbanes-Oxley Act, Dodd-Frank Act provisions, and SEC regulations governing corporate behavior and reporting requirements

Contract Law: State-specific contract laws and Uniform Commercial Code provisions governing agreement enforcement and interpretation

Privacy Laws: Data protection requirements and information sharing restrictions applicable to corporate agreements and operations

Industry-Specific Regulations: Sector-specific compliance requirements and industry standards that may affect the agreement terms

Share Rights and Classes: Provisions defining different share classes, associated rights, preferences, and privileges

Voting Rights: Specifications for shareholder voting rights, procedures, and majority requirements

Board Composition: Rules governing board structure, appointment rights, and decision-making processes

Transfer Restrictions: Limitations and conditions on the transfer of shares, including right of first refusal and lock-up periods

Pre-emptive Rights: Rights of existing shareholders to maintain their ownership percentage in future share issuances

Tag-along and Drag-along Rights: Provisions allowing minority shareholders to join in sales (tag-along) and majority shareholders to force participation in sales (drag-along)

Anti-dilution Provisions: Protections for investors against dilution from future rounds of financing at lower valuations

Information Rights: Requirements for providing financial and operational information to shareholders

Exit Provisions: Terms governing company sale, IPO, or other liquidity events

Dispute Resolution: Mechanisms for resolving conflicts between shareholders, including mediation and arbitration procedures

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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