The National Venture Capital Association (NVCA), the venture community’s trade association, has announced long-awaited updates to its model legal documents. NVCA forms are widely used as the definitive agreements in preferred stock financings and are quite familiar to members of the emerging companies/venture capital community.
The January 2018 updates impact the form Certificate of Incorporation, Preferred Stock Purchase Agreement, Voting Agreement, Investors’ Rights Agreement, and Right of First Refusal and Co-sale Agreement. Highlights of the updates include the incorporation of optional provisions specific to life sciences transactions, optional provisions that allow parties to select the Delaware Rapid Arbitration Act as the agreed-upon method of dispute resolution, changes to the board designation and drag-along provisions in the Voting Agreement to ensure their effective implementation, and changes to the optional redemption rights provisions in the Certificate of Incorporation to provide for the accrual of a high rate of interest on the redemption price payable with respect to shares subject to an unfulfilled redemption request.
Other, equally important updates are reflective of the changing cultural and tech landscape since the last set of comprehensive updates in 2014. These include the incorporation of an optional investor blocking right in the Certificate of Incorporation over token-crypto-currency, and block-chain-related offerings, which is currently deemed advisable from an investor perspective given the uncertain regulatory environment surrounding these types of offerings, and an optional covenant in the Investors’ Rights Agreement that requires a company to adopt and maintain a code of conduct prohibiting workplace harassment and discrimination.
The NVCA also made practical changes to its model financing agreements including consent to electronic notice, an acknowledgment of the actual means of communication most common among parties.
View the NVCA Model Legal Documents.