Take a seat


Typical legal form for start-ups

Delaware C-Corporation (Corp./Inc.)

Brief information

Start-ups usually choose the form of the Delaware C-Corporation. It offers the advantages of limited shareholder liability and does generally not have minimum share capital requirements.

A PE/VC Fund may, under certain conditions, supervise its investment through an observer seat in the board of directors.

The bodies of Corporation are the shareholders' meeting, the Board of Directors and the officers. The shareholders' meeting elects the Board of Directors and approves extraordinary company actions. The Board of Directors manages the Corporation and approves the material company actions (strategy, employee participation, budget, etc.). In relation to third parties, the Corporation is represented by officers who also carry out the day-to-day management. They are appointed by the Board of Directors.
There is no separate supervisory body. However, investors can be granted an observer seat status by contract. The observer may attend meetings of the Board of Directors but has no voting rights.

A PE/VC Fund may in principle accept an observer seat, whereby the contractual structure is decisive in the individual case. The observer may not exercise any influence on the management decisions.
PE/VC Funds may not participate in the Board of Directors.

Possibility of Participation

Limited Liability Company

Brief information

This legal form, as an alternative to the ltd., is rarely chosen by start-ups.

The information in our toolbox provides managers of private equity or venture capital funds with an initial overview of certain framework conditions in the respective country. It does not provide advice on the law of any country, neither does it substitute such advice. Before taking over a board seat in a portfolio company, it is at all times necessary to seek expert advice. Our team is happy to assist you with all questions at any time.

In collaboration with: Pearl Cohen

Sources: Wegen/Spahlinger/Barth, Gesellschaftsrecht des Auslands 2. EL Januar 2018