Supplemental to our previous writing on ‘Investor Protection Rights - Share Subscription and Shareholders Agreement’, this article focusses on various ‘Exit Rights’ sought and negotiated by the Investors while making investments, where such Exit Rights are aimed towards providing an exit opportunity to such an Investor in either of the following manners:
- by the sale of shares held by such an Investor on predetermined terms; or
- through facilitation of the sale of such shares by the Company or Founders on predetermined terms.
Under certain conditions, the Exit Rights may also, in some cases, be triggered upon sale of shareholding by the Founder or other Investors.
This article is intended towards enabling the Founders and Investor alike to comprehend the nuances involved in negotiating the terms concerning Exit Rights, and to safeguard their respective interests vis-à-vis the underlying object of the proposed transaction. The agreed terms as a result thereof form part of the Investment Agreement (Share Subscription and Shareholders Agreement).