Recent Answers to Common Stock Purchase Agreement Law Questions
What are the key provisions to include in a Common Stock Purchase Agreement?
Investments
Common Stock Purchase Agreement
Texas
I am in the process of negotiating a Common Stock Purchase Agreement with a potential investor for my startup, and I would like to understand the essential provisions that should be included in the agreement to protect both parties' interests, such as the purchase price, number of shares, representations and warranties, conditions precedent, and any restrictions on transferability or voting rights.
Darryl S.
The specific terms (such as whether to give any voting or veto rights for example) will depend on factors like your company's stage, the investor's sophistication level, and the investment amount or percentage of the company the investor is acquiring. Consider having experienced counsel review the agreement, as the long-term implications of certain provisions can significantly impact your company's future governance, ability to raise funds and options to bring on other investors or key employees. Early stage companies often have significant restrictions on transferability of the stock, a ROFR clause and claw-back options. The provisions you mention are also required as they are core to the business terms. Hope this is helpful. The classic lawyer answer is "It depends" and that is true here.
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