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Protective provisions

Also called: investor protections, veto rights

In one line

Contractual rights giving preferred investors a veto over specified major company decisions.

In plain English

Investors negotiate protective provisions so key actions — selling the company, issuing senior shares, big spending — need their consent. These sit above ordinary voting.

If you were explaining it to a 5-year-old

Certain important club decisions can't happen unless the big early members agree — they hold a veto.

Why it matters when you sell

These provisions concentrate control with investors, reinforcing the limited power (and discount) attached to common stakes.

Related terms

Preferred stockVoting rightsStockholder approvalBoard seat

Put it to use

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Sources

A general market-practice term. See how we define and source the glossary in our methodology. General information, not advice.

Educational information only — not financial, tax or legal advice, and not an offer to buy or sell any security. Definitions are general; your own documents and local law govern your situation. PrivateTechShares is independent and not a broker or marketplace.