Information rights

Definition

A promise to send investors particular reports on a schedule.

Why It Matters

Every investor has them, and the version signed decides how much of a first year goes into reporting instead of operating. The usual package is monthly financials within a set number of days, an annual budget, and the right to inspect the books. The trap is the deadline rather than the work: a monthly package due on the tenth, from a company whose bookkeeping closes on the twentieth, is a promise broken in month one. Match the dates to the close the business actually runs, and say so before signing.

In numbers: On a $4M business, statements due within 15 days of month end is twelve deadlines a year against a close that takes twenty.