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Legal Terms
It is likely that a shareholders' agreement would be prepared containing the rights and obligations of each party. This could include:
- Amount and terms of investment.
- Dividend policy.
- Composition of the board of directors.
- Reporting - management reports, monthly accounts, annual budgets.
- Liquidity (exit) plans.
- Rights of co-sale.
- Warranties.
- Matters requiring venture capitalist approval (such as auditors, employment contracts, major asset purchases, major debt obligations and significant variations of plans).
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