Issue link: https://htpgraphics.uberflip.com/i/246991
Glossary of Common Terms Section 10 Nominee Director – A director appointed by someone to the board of the company, essentially to be their eyes and ears within the company and (as far as they can) to represent their interests. Your Institution or one of the Investors may want to appoint a nominee director. Whomever appoints them, though, they always have to act in the best interests of the spin-out. Non-Executive Director – A director who has no role in the day-to-day operation of the company but usually attends board meetings and other meetings and becomes involved in the strategy for the business as and when determined. An Investor will normally appoint at least one non-executive to the board for which they usually receive a fee. Observer – Someone appointed by a third party, such as your Institution or one of the Investors, to act as the eyes and ears of their appointer. Depending upon the Articles of Association of the company, they may or may not have the right to speak at board meetings. However, as they are not a director, they will not have the right to vote at board meetings Patents – Registered rights which protect inventions for either products or processes. Details of all UK patents or applications for patents are held with the UK Intellectual Property Office. It is also possible to register patents in Europe and other countries around the world. Preference Shares – A class of share to be paid which is entitled to a dividend of a fixed amount – in priority to any other dividend. Such shares may also be "redeemable" where the company will effectively buy them back at a fixed price over a period of time. Proof of Principle (PoP) – This is the activity which takes an idea (frequently expressed in a development proposal format) to a state whereby the idea can be demonstrated in some way such as by a rudimentary prototype, phantom images or sample study, and can generate sufficient data eg statistical evidence, images, computer models, under certain types of conditions, to show that the idea has merit, such that further funding to develop proper working proposals is justified. This will probably be the activity after an invention disclosure has been discussed with the IP commercialisation organisation and before any seed funding proposal is put together. This is regularly called Proof of Concept (PoC), although PoC customarily describes a slightly earlier stage eg just showing basic feasibility. You will however see PoP and PoC used interchangeably. Ratchet – A mechanism whereby management's share of the equity is either increased or decreased as a result of performance of the spin-out vehicle. Typically, an upwards ratchet will be applicable where management believe they 50