In some cases, a person or company may want to simply inject cash into your business. Typically, this is done in exchange for a portion of future profits. These parties are known as investors.
Similar to business relationships where a partner signs a partnership agreement, it is essential to have potential investors examine and sign investor agreements. These are contracts that outline the amount to be invested, what this investiture entitles each party to do, and what is to be done in case of a breach of contract.
A Bloomington investor agreements lawyer could help you draft and execute these contacts. An experienced business attorney can handle every stage of the process from negotiating terms, to drafting the documents within legal requirements, to ensuring all parties fully understand the terms before signing.
Why Find Investors as Opposed to Partners?
Bringing in a new partner, shareholder, or member into a business enterprise can be a complicated process. If the company is just forming, it will be necessary to create a business plan document that outlines the obligations and rights of every member of that group.
This can become even more complicated if the business already exists and a new member needs to be added. In these cases, it may be necessary to realign voting rights, reestablish profit rights, and edit existing business formation documents.
Seeking out an investor can avoid many of these issues. An investor simply provides an entity with an infusion of cash. Normally, this is done in exchange for a percentage of that company’s profits. This investor has no say in the running of the company, nor do they usually have any voting rights at meetings. A Bloomington investor agreement lawyer could provide more information about the differences between investors and partners.
The Legal Rights of Investors in Bloomington
Above all else, it is important to remember that an investor agreement is a contract. This means that both an investor and the company have legal rights under the terms of the agreement. However, the rights of the investor end with the terms in that contract. For example, investors’ rights generally only apply to profits and do not give them a say in how a business is run.
Still, this does not mean that an investor cannot petition a court to uphold their rights. A company that breaches a contract in terms of their obligations to an investor can be held liable in a civil court. Additionally, most companies retain a legal duty to do what is best for their investors when making decisions concerning company policy. As a result, entering into an investor agreement creates many complex legal relationships. A Bloomington investor agreements lawyer could help provide clarification on those relationships.
Let A Minnesota Investor Agreements Attorney Help
A major part of securing funding for a business is seeking out investors. This can apply both at the formation stage of a company or if a business is looking to expand. While investors do not have a direct say in how a company is to be run or a hand in day-to-day operations, they still retain certain legal rights to profits and owners still owe them a duty of care.
A Minnesota investor agreements lawyer could help to foster a beneficial relationship between business owners and investors. Call today to see how a knowledgeable attorney could help you.