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My prospective venture capital investor wants information rights in connection with its purchase of stock in my company. What are information rights?
Information rights are contractual rights to receive financial and other information from a company. While publicly-held companies have extensive periodic reporting obligations that mandate distribution of quarterly and annual financial and business information to stockholders, most privately-held corporations do not have legal obligations to provide corresponding information to equity investors. Information rights typically require that audited annual and unaudited quarterly financial statements, and sometimes annual budgets, be sent to the holder of such rights.
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