Venture Deals · glossary
Writing a protection into the constitution as well as the agreement. A breach of the agreement gives only damages, but a breach of the constitution may be an act the directors had no power to do. Article 20 · Chapter 11
Explained in Chapter 11, Control: the Board, Consent Matters and Information Rights, of Venture Deals.
A breach of the agreement gives only damages, after the event. Writing a rule into the constitution, called entrenchment, turns “you promised not to” into “you had no power to”. Clause 23.3 deals with the overlap: a right meant to bind the company or a future shareholder, such as the next round's investor, works only so far as it is in the constitution.Read Chapter 11, Control: the Board, Consent Matters and Information Rights →
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