Definition
Information Rights
Information rights entitle an investor to receive regular financial statements and updates about a company they have invested in.
Investors negotiate information rights so they can monitor their investment, typically receiving periodic financial statements, budgets, cap-table updates and material developments. These rights matter most to investors without a board seat, who otherwise have limited visibility into the company.
Information rights are set out in the shareholders' agreement and are a basic governance protection. The level of detail and frequency are negotiated, balancing investor oversight with the founders' administrative burden.
Related terms
- Term SheetA term sheet is the non-binding document that sets out the key terms of a proposed startup investment before definitive agreements are drafted.
- Nominee DirectorA nominee director is appointed to a board to represent the interests of a specific stakeholder, such as an investor, lender or the government.
- Protective Provisions (Veto Rights)Protective provisions are veto rights that let investors block certain major company decisions even as minority shareholders.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.