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Offshore Venture Capital: Duties
- The article explores loyalty and duties in startups and venture capital funds, focusing on the perspectives of directors and founders like Kendrick Lamar who invest in tech startups.
- Directors in startups face challenges balancing their roles as founders and board members, as they owe duties primarily to the company, which can lead to conflicts of interest.
- Venture capitalists also navigate conflicting roles due to their duties towards the company, their own investors, and personal interests, with potential risks of personal liability.
- The article highlights the offshore option of structuring a venture as a BVI company to address conflicts of interest, providing safe harbors for directors.
- In the US context, directors owe fiduciary duties to shareholders, with preferred stockholders not receiving the same protections as common stockholders.
- In contrast, in the BVI, directors primarily owe duties to the company itself, allowing for equal treatment of shareholders and potential statutory rights for preferred shareholders.
- Rules for directors of venture capital-backed companies include addressing conflicts of interest and understanding the fiduciary protections available, especially regarding preferred rights.
- The article emphasizes the importance of seeking legal advice and considering alternative solutions to mitigate risks in the complex landscape of startup governance and venture capital.
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