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QUESTIONS & ANSWERS view all

What events lead to the dissolution of a joint liability company?
A joint liability company is ended by any of the following:
• End of duration as set in contract
• End of its purpose
• Loss of company capital
• Partners agreeing to end the company

Furthermore, the court may always declare a company as ended based on the request of a partner or more. It may also disqualify partners not fulfilling their obligations towards the company.
What are the main terms to negotiate in the term sheet?
Certain clauses are fixed and often imposed by venture capitals (VCs) in the term sheet such as:
• the lock up clause (pursuant to which the founders can exit the startups only after the VC)
• the drag along clause (pursuant to which the majority shareholder who wishes to sell his/her shares can force the minority shareholders to join the deal)
• the tag along clause (which assures that if the majority shareholder sells his/her shares, minority shareholders have the right to join the deal and sell their shares at the same terms and conditions as would apply to the majority shareholder)

Other clauses should be negotiated with the VC to show that the founder stands up for the important issues:
• Valuation/Dilution: valuation refers to the value of your company pre-investment, and determines the price of new money coming in. The lower the value that is placed on your company, the higher the cost of VC money since your ownership of the company will be diluted to a greater extent
• Liquidation Preference: the liquidation preference determines the profit that an investor gets when the company is sold. It can have an important impact on your return which is why you should make sure to understand the actual dollar differences between the liquidation preference formulas. Keep in mind that terms put in place in the Series A often carry over to the Series B and beyond, so be careful what you agree to here even if it seems relatively harmless at this stage
• Composition of the Board of Directors: Usually, early-stage boards should reflect the relative control of the cap table to determine the representation of each of the investors and the common shareholders on the board.
• Protective Provisions: also known as “veto rights” and often in the hand of VCs over specified corporate actions. The protective provisions may not be explicit so make sure you consult your lawyer in this regard.
• Founder Vesting: You may provide that your stock is owned and fully vested upon issuance. However, VCs may want to incentivize you to stay in the company (at least until a milestone is achieved) and therefore, may request that your shares be subject to vesting provisions (e.g.: 25% a year over the next 4 years).
• Anti-dilution Protection: Anti-dilution protects the VC from future sales of preferred stock at a lower valuation. The variations in the types of anti-dilution protection define the extent to which the VC is protected.
• Exclusivity: VCs may request that you don’t talk with other investors for some period of time after you sign the term sheet. Normally, 30 to 45 days is enough to finalize a VC investment in almost all cases
How much would it cost to register an xxx.lb domain name and what are the annual renewal fees thereafter?
Until now the services of Lebanese Domain Name Registry at the American University of Beirut are completely free of charge and there are no renewal fees.
Can I make assign a trademark without the goodwill of the business?
Yes, you can.

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