When a startup seeks funding, one of the most sensitive legal aspects is how the entry of new investors is structured. Beyond negotiating potential preferential rights\u2014such as reinforced majorities or exit rights\u2014rights of first refusal (ROFR) also come into play. These provisions can protect\u2014or complicate\u2014the balance among shareholders.<\/p>\n
Simply put, ROFR clauses allow existing shareholders to purchase, under equal conditions, the shares that another shareholder intends to sell<\/strong> to a third party or those issued in a capital increase<\/a> (this alone could be the subject of a separate blog post). It\u2019s a way to ensure that no one enters the cap table without giving existing shareholders the opportunity to match the offer.<\/p>\n These rights serve to:<\/p>\n In Spanish private limited companies (sociedades limitadas), the Spanish Companies Act (Article 107 LSC) states that, unless otherwise provided in the bylaws, shareholders have a preemptive right in the case of voluntary transfers<\/strong>. Additionally, Article 93 LSC recognizes preemptive subscription rights in capital increases.<\/p>\n\n
What does the law say?<\/h2>\n
How does this apply in an investment round?<\/h2>\n