What happens if the company sell all of the assets?

On sale of all the assets, the sale proceeds will be held by the company. Investors holding the A Ordinary Shares will only receive the sale proceeds based on their equity ownership if the company decides to pay dividends or wind-up. Investors should have control over the process as the investment agreement will normally prohibit sale of all the assets of the company without their consent.

What happens in an IPO?

On an IPO, the A Ordinary Shares will usually be automatically converted into Ordinary Shares, so that investors participate in the IPO as any other holders of Ordinary Shares.

On a winding-up of the company?

In the event of a return of capital on winding-up, investors holding the A Ordinary Shares will simply be paid a proportion of the proceeds based on their equity ownership of the company along with holders of the Ordinary Shares. Investors should have control over the process as the investment agreement will normally prohibit winding-up of the company without their consent.

Startups Archives

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Category: Startups

March 16, 2021

What are A Ordinary Shares? What is a liquidation preference, and why do investors ask for it?

What legal services do startups need?

EIS SEIS legal advice and Advance Assurance

COVID-19: further regulations on wrongful trading and company meetings

Good leavers, bad leavers and ‘grey’ leavers.. what happens to their shares and options

Investor director, independent directors and board observers: roles and responsibilities

What does ‘reverse vesting’ mean for founders?

Drag and tag rights. What are the “customary provisions”?

Directors’ duties

Future Fund convertible loans

What do you need to think about before signing a shareholders’ agreement?

Convertible loan notes – a financing alternative?

Is ‘dilution’ bad for shareholders?

Articles of Association – FAQs

Enterprise Management Incentives

Growth Shares – alternative to EMI options

What are pre-emption rights? Should you care about them?

What do I need to know about an advanced subscription agreement?

How should you value your company?

Thinking about angel investment

Are you on the hook with a Personal Guarantee?

10 key things to include in your shareholders’ agreement

Don’t forget about Business Relief for Inheritance Tax in planning a sale of your business

How to remove unwanted minority shareholders

Good news for EMI

New protection against identity fraud for company directors

What is the PSC (‘person with significant control’) register and why has it been introduced?

SEIS and EIS – Tax efficient schemes designed to help small and medium sized businesses