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An investor rights agreement (IRA) is a typical document negotiated between a venture capitalist (VC) and other concerns providing capital financing to a startup company. It provides the rights and privileges afforded these new stockholders in the company.
With demand registration rights, investors have a right to force a company to register shares with the SEC. Once registered, the shareholders can then sell their shares to outside investors and exit the company.
A registration right is a right entitling an investor who owns restricted stock to require that a company list the shares publicly so that the investor can sell them. Registration rights, if exercised, can force a privately-held company to become a publicly-traded company.
Demand registration rights enable the stockholder to require the issuer to register all or a portion of its shares. Piggyback registration rights allow a stockholder to include shares in a registration being effected by the issuer either for its own account or for the benefit of other selling stockholders.
Demand registration vs Piggyback registration Demand registration allows shareholders to demand that a company undergo an IPO, whereas investors relying on piggyback registration do not share that right of pushing a company to undertake an IPO.
There are two types of registration rights: demand and piggyback. Demand registration rights enable the stockholder to require the issuer to register all or a portion of its shares.
What Are Piggyback Registration Rights? Piggyback registration rights are a form of registration rights that grants the investor the right to register their unregistered stock when either the company or another investor initiates a registration.