LegalAdvanced

Shareholders’ Agreement

The binding contract signed when investors put money in. It turns the promises in the term sheet into enforceable rights about voting, board seats and selling shares.

Example

The SHA is what actually gives your investor a board seat — the term sheet only proposed it.

Related terms

Cap Table

A list of everyone who owns a piece of the company — founders, investors, employees with options — and how much each holds.

Term Sheet

A short, mostly non-binding document that lays out the key terms of an investment before the full legal paperwork is drawn up.

Liquidation Preference

A term that decides who gets paid first (and how much) if the company is sold. A "1× preference" means investors get their money back before founders see anything.

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