From Concept to Wall Street: A Complete Guide to Entrepreneurship and Venture Capital by Uri Geiger Oren Fuerst

Author:Uri Geiger Oren Fuerst [Oren Fuerst, Uri Geiger]
Language: eng
Format: mobi
Publisher: ePub Bud (www.epubbud.com)
Published: 2011-12-26T05:00:00+00:00

Piggy-back registration right— This is a right granted to shareholders to sell additional shares when the company is in any case registering shares for itself. This right does not impose a particular burden on the company, and the main restriction is on the number of shares which the shareholder will sell so as not to "flood" the market and prejudice the offering.

Restrictions on Registration Rights

The company will usually require that the registration right be limited in several ways: (1) The right will not exist before an IPO is performed (in other words, the company may not be compelled to make such an IPO); (2) Restrictions on the period of time in which a demand registration right may be exercised and the number of times this may be done; (3) A requirement of a minimum percentage of investors for demand registration; (4) A restriction on the number of shares to be sold, as determined by the underwriters (the underwriters will refuse to commit to selling a very large number of shares which could cause the price of the share to decline) and the fixing of an arrangement according to which the shares will be sold; (5) Other restrictions required by the underwriters, such as a prohibition of the sellers to sell shares (lock-up) for 90–270 days following the public offering.

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