Legal Review of the Validity of Prior Consent Obligations in Investment Contracts
Article posted in 2024-03-12 11:57:06 | VEAT
Law firm Veat received a request from Startup A (hereinafter referred to as "Client") to review the validity of the pre-consent obligation in the investment contract and prepared an opinion.
Law firm Veat’s Investment Advisory Team conducted a legal review regarding the legality of key managerial consent items agreed with investors and the legality of rejecting investor consent.
In particular, they focused on reviewing whether the validity of the consent obligation clause can be denied when a specific investor refuses consent and whether a violation of good faith can be argued against the investor’s refusal of consent.
According to Supreme Court precedent, granting preferential rights or benefits to shareholders is generally considered a violation of the principle of shareholder equality. However, such cases may be allowed if they follow legally permitted procedures and methods or if there are special circumstances justifying the differentiated treatment.
Law firm Veat’s Investment Advisory Team thoroughly reviewed recent Supreme Court precedents and legal reasoning regarding the consent obligation and the principle of shareholder equality. They clarified the complex legal relationships between investors and companies regarding the effect of managerial consent clauses and the limits of good faith violation claims when consent is rejected, and established a strategy to minimize the legal risks that the Client may face.
The principle of shareholder equality requires multifaceted review The principle of shareholder equality is a Commercial Code principle under which shareholders are treated based on the number of shares they own. Voting rights are limited to one per share, with the exception of shares held by the company itself, which have no voting rights. Granting preferential rights or benefits to shareholders is generally a violation of the principle of shareholder equality, but exceptions may be allowed if they follow legally permitted procedures and methods or if there are justifiable circumstances. Regarding the principle of shareholder equality, it is necessary to comprehensively consider the circumstances recognized in the Commercial Code and other related legislation and precedents. Furthermore, if you require a detailed and comprehensive legal review to determine whether the contract in the investment contract can be validly applied and whether there are essential clauses, we recommend seeking legal support from an investment lawyer who has successfully led various investment and mergers and acquisitions cases. Law firm Veat provides comprehensive legal reviews for successful investment acquisition and M&A, based on extensive experience and expertise in the investment and M&A sectors, and supports the successful conclusion of each transaction.
If you need legal advice regarding investment or M&A, please contact Law firm Veat. Thank you. Sincerely, Law firm Veat