Venture Capital William B. Asher, Jr. Testa, Hurwitz & Thibeault, LLP Boston, MA 617 / 248-7000 asher@tht.com tht.com		What kinds of stock transfer restrictions are typically placed on insider stockholders in a venture capital financing? These restrictions generally come in two flavors. Rights of first refusal require insiders to first offer shares to the investors (or to the company and the investors) before selling to a third-party. Rights of first refusal are designed to maintain stock ownership within the existing shareholder group. Co-sale restrictions enable investors to participate proportionately in sales by insiders to a third-party. Co-sale restrictions are intended to prevent insider bailouts. In both cases, exceptions should be made for intra-family transfers.

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