Shareholders' Agreement

A legally binding contract that establishes confidentiality obligations between parties sharing proprietary information. NDAs are essential tools for protecting trade secrets and other sensitive intangible assets during due diligence, partnership discussions, and employee onboarding.

A contractual arrangement in which one party agrees not to engage in competitive activity for a specified period and within a defined geographic area. Non-compete agreements are recognised as identifiable intangible assets in purchase price allocations and serve to protect acquired customer relationships, trade secrets, and human capital.

A financing instrument developed by Y Combinator that provides investors with the right to receive equity at a future priced round, subject to a valuation cap and/or discount. SAFEs are simpler than convertible notes, carry no interest, and have no maturity date.

A group of individuals elected by shareholders to oversee company management, set strategic direction, and protect shareholder interests. Investor-backed companies typically include board seats for lead investors alongside founder and independent directors.

A detailed register of a company's equity ownership structure showing all shareholders, their percentage ownership, share classes, options, warrants, and the dilutive effect of each financing round. A clean cap table is essential for fundraising and exit readiness.

A reduction applied to the pro-rata value of a business interest to reflect the lack of control associated with a minority ownership position. Minority discounts account for the inability of minority shareholders to influence key decisions such as dividend policy, asset sales, and management appointments.

The percentage ownership interest a shareholder holds in a company. Equity stakes determine voting rights, dividend entitlements, and the share of proceeds received in a sale or liquidation event.

A provision that allows majority shareholders (or lead investors) to force minority shareholders to join in the sale of the company on the same terms. Drag-along rights prevent minority holders from blocking an exit that the majority supports.