Issue link: https://htpgraphics.uberflip.com/i/246991
Company Documentation Section 6 a claim must be brought. It is also usual for each manager to cap his/her personal liability at an agreed amount eg an amount equal to three times his/her annual salary. You should also bear in mind that the Shareholders' Agreement which you agree at the outset of the spin-out's life will almost certainly be superseded as new investors become involved and new funds are provided to the company. Different venture capitalists, for example, tend to have their own forms of Shareholders' Agreements which they will usually insist on using when making an investment. Articles of Association The Articles set out the rights attaching to each class of shares in the company. The Investor may subscribe for a different type of shares to the management team. The Investor's shares will often carry preferential rights. INVESTOR'S PREFERENTIAL RIGHTS n to dividends n first return of capital n enhanced voting rights The Articles usually stipulate certain matters which require the Investor's prior consent (see 'Specimen Restricted Acts'). The advantage of setting such matters out in the Articles is that the Articles are a public document and third parties will be aware of the need for such consents. The Articles will usually also include the Investor's right to appoint (and remove) an Investor Director and will specify the quorum for board meetings, including whether the Investor Director must be present for a board meeting to be quorate. The Investor will usually insist on restrictions on the ability of the members to transfer their shares in the company. 39