Corporate law

Bringing in an investor without the founder losing control

Bringing in an investor without the founder losing control

· Corporate law

A founder needs capital. An investor wants in. Both are right about what they are asking for: one needs the money, the other needs security over the investment.

The friction is almost always the same: if the capital increase is done without structure, the founder ends up diluted and — usually more painfully — without control over decisions in their own company.

What we did

In a recent matter we structured the deal around three pieces that work together.

1. Classes of shares

We designed preferred shares with strong economic rights but limited voting over day-to-day operations.

The investor gets what they actually want — participation in profits, preference on distributions, information — without the direction of the business being subject to their approval at every turn. The General Law of Commercial Companies allows shares with different rights, and it is a far less used tool than it should be.

2. Amending the by-laws

In an extraordinary meeting we amended the by-laws to set special quorums and majorities for critical decisions: change of corporate purpose, sale of essential assets, further capital increases, dissolution.

Certain decisions therefore cannot be taken without the founder’s vote, regardless of percentages.

3. Shareholders’ agreement

Outside the by-laws, a shareholders’ agreement regulating in advance what is almost never discussed at the start: exit rules, pre-emption rights, drag-along and tag-along, profit distribution and non-compete clauses.

The piece that is almost always missing

There is one point we review before any capital increase: whose name the intangible assets are in.

It is common to find the trademark registered to the founder as an individual rather than to the company; software built by a third party with no assignment; a domain registered to someone who is no longer involved.

If that is not corrected first, the investor would be capitalising a company that does not own what makes it valuable. And if it is corrected afterwards, it is negotiated on worse terms.

What to check before opening your capital

  • That the trademarks are registered in the company’s name.
  • That assignments exist for everything created by third parties.
  • That the by-laws protect the decisions you do not want to lose.
  • That the shareholders’ agreement exists before the disagreement, not after.

Taking investment does not have to mean giving up control. It means structuring it properly.

If you are about to take on capital, write to us: we will review the structure before you sign.

Leer esta publicación en español

Free, no commitment

Find out if your trademark can be registered

Four out of every ten marks that reach us cannot be registered as they stand. Send us the name and we come back with a straight answer on whether it has an obvious problem. No cost, no commitment. Need the full analysis, signed and in writing? That is the registrability opinion: USD 49 per mark and class, credited against your fees if you then file with us.

Prefer to write? Message us on WhatsApp.

Free guide

The 7 costliest mistakes when registering a trademark in Mexico

The seven that cost a business the most, with the legal basis for each. Leave your email and we send it now.

More on Corporate law


Previous A personal brand inside the family: trust is not a title deed Next I arrived in Mexico knowing nobody, and cold-emailed the best trademark lawyers