A Delaware Case With Lessons For VC Firms And Founders
By Matthew Rifino and Philip Amoa ( June 22, 2017, 5:58 PM EDT) -- Venture capital firms and founders of companies should take note of a recent important ruling from the Delaware Court of Chancery. In a case of first impression, the court rejected a venture capital firm's effort to employ Section 204 of the Delaware General Corporation Law to ratify an amendment to the company's charter that would have forced the founder out of the company. While many companies use the model legal documents from The National Venture Capital Association, this ruling highlights the need for both sides to carefully negotiate the amendment provisions that are commonly used in the NVCA forms — specifically the voting agreements — which establish the parties' roles in managing the company's future....
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