In our last article, we explained how Martini leverages transaction documents to provide actionable business intelligence. In this post, we will zoom in on two sets of clauses that are of significant commercial importance: investor non-competes and director appointment rights.
Our analysis has shown that investors rarely agree to non-competes. In fact, only 3% of shareholders’ agreements include investor non-competes.
However, where investment firms agree to non-competes, these are often broad in scope. Therefore, it is crucial that the entire organisation is aware of these restrictions, if not, there is a material risk of non-compliance and litigation.
With Martini, your firm’s global information on non-competes is just 2 clicks away.
Director appointment rights
A diverse board comprising a visionary management team, industry experts, and well connected advisors and investors are crucial for the success of any investee company. Major investors often seek the right to appoint a board member to help the company with strategic decision-making and provide oversight.
However, along with rights come obligations. Investors and investor directors need to tackle various compliance issues that can arise from having board representation.
- Conflict of interest. Investor directors may own dueling responsibilities to the investee company and the investment firm that employs them. Measures may need to be taken to resolve a conflict of interest. This may include disclosures, creation of information firewalls, or the recusal from meetings and decision-making.
- Confidentiality. Price-sensitive information, for listed entities, and other confidential information needs to be handled by both the investor and the investor director carefully and subject to robust protocols.
- Antitrust. Where the investor has board appointees on multiple companies in the same markets, antitrust compliance issues need to be navigated by both the investor and the investor director.
With Martini, your global information on director appointments is only two clicks away.
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Driven by a love for tech innovation and zealousness for economic development, Yero is passionate about all things startups, venture investments, and youth entrepreneurship. Occasionally passing as a professional Scrabble player on weekends, he loves languages and was once a radio host. Formerly lived and worked in Dakar, Hong Kong, Abu Dhabi, London and New York.