What is the right way to check the startup financial status you have shares with?

Alex Pantelo Software Engineer/Product Development Specialist

November 16th, 2016

The working partner saying that the company underperforms all the time, and it always not enough cash flow/capital. it’s software company and all communication with clients go thru working partner.

Martin Omansky Independent Venture Capital & Private Equity Professional

November 16th, 2016

Depending on jurisdiction, as a shareholder you have data rights. Sent from my iPhone

Irwin Stein Very experienced (40 years) corporate,securities and real estate attorney.

November 16th, 2016

You should have rights set forth in the agreement under which you bought the shares. Call your lawyer.

Tom DiClemente Management Consulting | Interim CEO/COO | Coach

November 16th, 2016

Check your shareholders' agreement and your share purchase agreement. Depending on who managed the deal, there may also be an investor rights agreement which otherwise is included in the shareholders' agreement..

You have no data rights unless it is specifically set out, usually in the shareholders' agreement, or in the purchase agreement.

If you did obtain data rights, you need to try to enforce your rights. However, if the company refuses, your only recourse is trying to convince them or suing.

If you did not obtain data rights, try to negotiate with the company for the information.

Alex Pantelo Software Engineer/Product Development Specialist

November 17th, 2016

I do have the rights, the question is what can I ask or do, to check if the financial information provided to me is legit and correct without involving the lawyer… we all know how costly it could be.

Tom DiClemente Management Consulting | Interim CEO/COO | Coach

November 17th, 2016

If you have information rights, you should also have the right to have the financials audited. But that can also be costly. You would not normally hire a lawyer to do this but an accounting firm. Information rights do not always give you personally the right to the books but usually only through a third party. However, if you are financially savvy, you can discuss with the company whether you can sit in their office and make various reports from their accounting system, perhaps quickbooks online, in order to understand the basis of the financials better. You should do all you can short of legal action.

Rob G

November 17th, 2016

assuming the company uses an accountant or at least a book keeper i would ask to sit down with this person and i would bring an experienced accountant/CPA with me. Your CPA will know which questions to ask and can smell BS if it is present and the company's accountant will know where to find the answers efficiently. Your CPA may need to sign a confidentiality/NDA fist.

Alex Pantelo Software Engineer/Product Development Specialist

November 17th, 2016

Thank You everyone.