Positive controls and negative controls |Startup | Sarthak Ahuja

What are “Negative Controls” and “Positive Controls” of Investors

👉🏼 Positive Control is the investor’s ability to vote as a Director, which is fairly limited. It would also mean the rights they have as shareholders, which are only meaningful if they have controlling stake of 51% or more, which is typically not the case.

👉🏼 So, more important than worrying about whether you want to give your investor a Board seat or not, you should read and negotiate hard on Negative Controls

👉🏼 “Negative Controls” means your business can’t do certain things unless you get an approval from your investors - these are also known as protective provisions, such as: future fundraising, change in shareholding structure, taking debt, merger or acquisition decisions, etc.

👉🏼 Your focus should be on reading through all Negative Controls in detail and negotiating on them to maintain maximum control.

👉🏼 What you cannot negotiate to remove, insist on getting a threshold in. For example, if change in related party transaction would require investor approval, you negotiate for increase in related party transactions beyond 50L per annum would require investor approval.

------------------------------------------------------------------------------------------------------------------------
Click here to subscribe to my YouTube channel: https://bit.ly/3cpTleK
-------------------------------------------------------------------------------------------------------------------------

Like, Share, Subscribe for more!

Follow me on my other social media handles for all updates, events and live sessions-
Instagram: https://www.instagram.com/casarthakah...
LinkedIn: https://in.linkedin.com/in/sarthak-ah...
Website: http://www.casahuja.com/
-------------------------------------------------------------------------------------------------------------------------

A Chartered Accountant with about 10 years of experience in areas of Tax Advisory, Startup Consulting, Fundraising, Audits, Deal Advisory, Business Modelling and contract CFO services.

Winner of the ISB Young Leader Award 2017 and the Best All Rounder, PGP Class of '17, Sarthak has also been published about in the leading financial newspapers such as The Financial Express as possibly the youngest Indian to have completed the courses of CA, CS and CMA along with a graduate degree in Financial & Investment Analysis from University of Delhi, all by the age of 23 years.

Видео Positive controls and negative controls |Startup | Sarthak Ahuja канала Sarthak Ahuja