Issue link: https://htpgraphics.uberflip.com/i/246991
Company Documentation Section 6 n Investor Director – A significant Investor will usually want a right to appoint (and remove) a representative to the Board. The Investor Director may have enhanced voting rights eg if the company fails to pay any fixed dividends on the due date or if the company has done things which it is prohibited from doing without the Investor's consent. This is not usually sought, though, if the Investor holds a majority of the shares. A fee, payable by the company, is commonly charged for the Investor Director's services. How much this is and how it is arranged can vary widely. At the spin-out stage, this may be dealt with under the terms of a separate services agreement between the Investor and the company. The Investor may also be providing accountancy and administration services to the company, while it gets off the ground. An Investor may require the attendance of the Investor Director for a board meeting to be quorate. In this way it will be able to monitor what decisions are being made by the board and provide direct input into the making of such decisions. n Observer – Routinely, instead of a director, the Investor will expect to be able to have someone attend all board meetings, who may or may not have the right to participate in discussions, but will not be able to vote. n Restricted Acts – An Investor usually stipulates certain matters which the company will be restricted from doing without the Investor's prior consent. In other words, the Investor is seeking to protect the value of its investment by preventing the company from doing fundamental things without its consent. 37