This article is one in a series of articles explaining various terms commonly seen in term sheets issued by venture capital funds. We give example language based on the commonly referenced .
Emerging companies formed outside the United States may want to redomicile their businesses to the United States to, among other things, enhance their fundraising prospects. U.S. venture capital investors often require non-U.S. companies to flip into Delaware corporations as a condition to investment. Given that custom and preference, non-U.S. startups may choose to redomicile to the United States in advance to well position themselves to receive U.S. venture capital quickly, eliminating potential setbacks or pre-conditions during the investment process itself.
If you’re reading this, chances are this is not the first time you’ve heard of the 83(b) election (and if it is, then definitely keep reading). The “83” in “83(b) election” refers to , and despite the relative simplicity of the concepts that this particular section deals with, the 83(b) election may be one of the most important tax filings you make while on your startup journey.
You’re an entrepreneur, you form your first company, and suddenly you carry the title of founder, director, officer, and/or employee all at once. When running your business, it may feel like all of your roles blur together. However, it’s important to remember your different roles when taking action on behalf of the corporation in order to protect yourself from liability.
A fiduciary is someone who is required to act for the benefit of another person on all matters within the scope of their relationship. Directors and officers of a corporation are fiduciaries. Under Delaware law, the general rule is that a director owes fiduciary duties of loyalty and care to the corporation and its stockholders.