Board rights

Board rights refer to an investor's or shareholder's right to appoint one or more members to the board of directors or supervisory board, independently of or in proportion to their shareholding. In fundraising transactions, venture capital and private equity funds negotiate board rights as a standard governance protection, conferring direct influence over strategic decisions, executive appointments and veto rights over material transactions. These rights are formalised in the shareholders' agreement and articles of association, with thresholds defining their activation and termination.

‍

Example: in a Series A round of CHF 5.0 million representing 25% of a Geneva startup's capital, the fund negotiates the right to appoint 1 of 5 board members, veto rights over unbudgeted decisions above CHF 500,000, and quarterly management accounts. Board rights remain active as long as the fund holds at least 10% of the company's capital.

‍

Hectelion advises both founders and investors on board rights negotiation and their long-term impact on governance and value creation.