What Series A Documentation Covers
The Series A stage means a significant investment entry, which legally translates into creating new classes of shares, increasing capital and reshaping the relations between shareholders. The service on this page is governed by Articles 135, 136, 137 and 164 of the Law on Entrepreneurial Societies. We prepare the draft charter amendment on share classes, the issue and preemptive purchase decisions, and provide the full documentation of the capital increase, so that the investor's entry proceeds as a lawful and transparent process.
Share Classes and Why They Matter
Under Article 135 of the Law, the charter of a limited liability society may allow the existence of different classes of shares. Shares that create identical rights and obligations form one class, and all shares of one class must have the same nominal value. The rights and obligations attached to different classes are regulated by the charter, which is why a precise description of the classes is a decisive element of Series A documentation.
One more rule matters greatly: a decision changing a right attached to any class of shares additionally requires the consent of holders of at least a three quarters majority of the total votes attached to the placed shares of that class, unless a part of the charter adopted unanimously by the partners provides otherwise. Changing class rights is therefore possible only through the procedure that we set out precisely in the documentation.
The Issue of New Shares and the Preemptive Right
Article 136 of the Law distinguishes placed, issued and authorised shares. Issued shares are recorded in the registry and create no rights until placement, while a decision to issue within the authorised shares must contain the number of shares, the nominal value and the class. In a case provided for by the charter, shares may be issued to the partners proportionally without a demand for contributions.
Article 137 gives the partners the preemptive right to purchase newly issued shares, unless the charter provides otherwise. The society may not place the shares until it has offered the partners in writing to purchase them on the same conditions; the period for exercising the right must be reasonable and not less than fourteen days. Restriction or exclusion of the right is possible only by at least a three quarters majority of votes, on the basis of a report of the management organ in which the reasonable grounds are stated and the value of the share transfer is substantiated. A partner may also waive the right in favour of a third party within the statutory period.