Moving Time

Asian Venture Capital Journal

09/05/2017

Thomas T.H. Chou

Private Equity + Venture Capital | China

In The News

It’s becoming common for startup founders to seek super-voting rights over their companies, as they reach Series B or C financing, in an effort to control the voting shares. According to Morrison & Foerster partner Thomas T.H. Chou, this practice may face resistance by investors, but only if other stakeholders are seeking more voting control in the process.

“In the absence of a new financing event, existing investors would typically resist amending the existing governance agreements to provide for such a change in voting control. However, if the new investors agree that the founder-CEO will have super-voting rights, the new investors likely will  want to ensure that existing investors do not end up with greater voting control per share than they have,” he said in the Asian Venture Capital Journal article “Moving Time.” “This means that the implementation of super-voting for the founder-CEO often ends up applying to all series of preferred shares, rather than against only the newest series of shares to be issued.”

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