Angel Investors’ Rights in Investment Agreements: Key Considerations
When angel investors come on board, investment agreements (and often updated Articles of Association ) govern rights, protections, and obligations. Here’s what to consider: 🔹 Exit & Transfer What happens if the investor or any other shareholder wants to leave or sell shares? Pre-emption rights: In case investor stays, and any other shareholder is exiting, the investor may seek for the first right to buy shares being sold. Drag-along & tag-along rights: Drag-along: this clause is relevant for protection of majority shareholder- Allows the majority to compel minority shareholders to join a sale, ensuring smooth exits during strategic transactions. Tag-along: this clause is relevant for protection of minority shareholder- Allows the minority to exit on the same terms if the majority is selling, safeguarding their interests. 🔹 Board & Governance Rights Right to appoint board members or observers. Veto/consent rights over major...