The fund had more than a dozen rights under the articles of association. During the next round, it agreed to give up exactly two — and not the ones the founders had fought for. That choice says more about negotiating with an investor than any term sheet handbook.
If you run a limited liability company after a seed or Series A round and are preparing for another capital increase, you have a window for negotiation ahead of you. But it is a window that opens only once — and closes when the notarial deed is signed. To take advantage of it, you need to know which fund rights under the articles of association can be removed and which will remain for years to come. And why the fund gives up some rights rather than others.
In this article, I will show you what a complete inventory of an investor’s post-round rights looks like, how to divide them into four layers, where you have a genuine opportunity to negotiate — and what can derail the entire transaction timeline.
Key concepts to understand before you start negotiating
Before we move on to the inventory of rights and negotiation tactics, make sure you understand several mechanisms that appear in every company’s articles of association after an investment round.
| Concept | What it means |
|---|---|
| Liquidation preference | The investor’s right to receive a specified amount (usually a multiple of its investment) before the other shareholders upon the sale or liquidation of the company or another “exit event”. A non-participating preference means that the investor chooses either the preference or a pro rata share. With a participating preference, the investor receives the preference and a pro rata share of the remainder. |
| Put option | The investor’s right to require the founders to repurchase its shares at a predetermined price — most commonly triggered by a breach of the agreement. |
| Tag along | The right to join a sale of shares — if a founder sells their shares, the investor may join the transaction on the same terms. |
| Conditional quorum | A requirement that a specific shareholder (in this case, the fund) be present at a shareholders’ meeting, without which resolutions are not binding — effectively operating as a veto right. |
| Reserved matters | A list of management board actions that require the investor’s prior consent — often on pain of invalidity. |
| ASI | An alternative investment company — the legal form in which Polish VC funds operate. |
| Sunset clause | A contractual provision under which a right automatically expires upon a specified event (e.g. the next investment round) or after a specified period. |
A complete inventory of the fund’s rights — four layers
The biggest mistake when negotiating with an investor is fighting over points recalled at random. A fund’s rights are scattered across more than a dozen sections of the articles of association. Without a complete inventory, no one — including the fund itself — sees them as a whole.
That is why, before you submit any proposal, the rights should be compiled in a table with one column for the “location in the articles” and another for the “substance of the right”. Only then should you divide them into layers.
Layer 1: exit and liquidation economics
These rights determine how much money the investor receives upon the sale or liquidation of the company.
- Guaranteed exit amount — a multiple of the investment that the investor receives upon any share liquidity event before anything is paid to the founders.
- Priority return of investment upon liquidation — the fund’s capital contribution plus share premium are returned before the company’s assets are distributed among the other shareholders. Article 286 § 3 of the Commercial Companies Code expressly permits “different distribution rules” to be specified in the articles of association.
- Transfer of intellectual property to the fund after liquidation — a clause under which all of the company’s IP passes to the investor once the liquidation process has been completed.
Layer 2: sanctions against the founders
These are deterrent mechanisms — triggered in the event of a breach of the agreement.
- Put option — a demand that the founders repurchase the shares for a predetermined amount.
- Voluntary redemption for consideration — redemption of the fund’s shares for consideration equal to its investment plus 100%.
Layer 3: control over share transfers
- Tag along — the right to join a share sale, reserved exclusively for the fund.
Layer 4: corporate control
These rights affect the company’s day-to-day management.
- Meetings at the fund’s registered office — a location imposed by the investor.
- Independent right to convene a shareholders’ meeting — the fund does not have to wait for the management board.
- Conditional quorum — resolutions are binding only if the fund is present. It is worth noting that, in judgment I CSK 62/18, the Supreme Court linked quorum requirements to the validity of a resolution, but did not expressly determine whether a named-person quorum (dependent on the presence of a specific shareholder) is permissible. This clause therefore remains subject to interpretive uncertainty.
- Reserved matters on pain of invalidity — loans, liabilities above a threshold of around PLN 150,000, disposals of assets above a threshold of around PLN 25,000, disposals of IP, incorporating and joining companies, and a recovery plan.
- Personal right to dismiss a management board member — the fund may dismiss any member of the management board, and its vote is required to appoint a successor. The legal basis is Article 159 of the Commercial Companies Code, which permits specific personal rights to be granted to a shareholder.
- 3-day notification obligation — the management board must notify the fund of every material change in the company within three days.
- Reporting obligations — linked to the investment agreement and the project implementation plan.
- Unanimity requirement — for an extensive list of resolutions.
What the fund will give up and what it will not — the outcome of negotiations
Two concessions from the sanctions layer
In the case under review, the fund agreed to remove exactly two mechanisms. Both were from layer 2 (sanctions):
| Right removed | Layer | Why the fund agreed |
|---|---|---|
| Put option | Sanctions | Difficult to enforce, costly to litigate, damages relations with the founders |
| Voluntary redemption for consideration = investment + 100% | Sanctions | Rarely triggered, requires cooperation, creates a valuation dispute |
What remained unchanged
Everything in layer 1 (exit economics), layer 3 (share transfers), and layer 4 (corporate control). The liquidation preference, reserved matters, conditional quorum, and personal right to dismiss management board members — all remained untouched.
The logic behind this outcome
Sanctions are deterrent weapons. They are costly to litigate, rarely triggered, and damage the relationship on which the fund’s returns depend. That is why the fund gives them up first — because their absence does not change its economic position.
The liquidation preference and veto over reserved matters operate every day. The preference determines the return on investment. Reserved matters give the fund control over operational risk. The investor will not give up these rights because, without them, it loses its reason for being involved in the company.
Where you have a chance and where you are wasting your time — a map of negotiation priorities
Realistic opportunities
- Sanctions against the founders — a put option, redemption at a premium, and contractual penalties for breach. The fund gives these up relatively easily because keeping them costs more — in terms of relationships and litigation — than they are worth.
- Adjusting the thresholds in the reserved matters — rather than seeking to remove the list, negotiate higher amounts. A PLN 25,000 threshold for disposing of assets means asking the investor about every larger purchase. A PLN 150,000 threshold for liabilities blocks ordinary contracts. Raising them to reasonable levels can often be agreed.
- Limiting the conditional quorum to selected matters — instead of a general requirement for the fund to be present at every shareholders’ meeting, restrict it to resolutions amending the articles of association or disposing of IP.
A waste of time
- Liquidation preference — the fund will not give it up. If you are negotiating your first round, push for a 1× non-participating preference rather than a participating multiple. By the next round, the structure will already be embedded in the documents, and changing it will require the fund’s consent — which you will not get.
- Veto right over reserved matters — the mechanism itself will remain. You can negotiate its scope and thresholds, but not its removal.
- Personal right to dismiss management board members — the fund regards this as protection against losing control over a portfolio company. Removing this right is beyond the scope of negotiation in a typical investment round.
A negotiation technique that works
Do not send the fund your own list of proposed deletions. A list of deletions invites the fund to defend every point — and the negotiations drag on for weeks.
Instead, ask one question: “what has to stay?”. This question reveals the investor’s real priorities. The answer is usually: the liquidation preference, reserved matters, and control over the management board. Everything not included on that list becomes open for discussion.
Once you receive an answer, confirm in writing (even by email) the final list of provisions to be removed. Do this before the lawyer starts drafting the minutes — otherwise the scope of the amendments will be reopened the day before the notary appointment.
Why an investment round is your only opportunity to clean up the articles of association
Amending the articles of association of a limited liability company requires a resolution recorded in a notarial deed (Article 255 § 3 of the Commercial Companies Code) and only becomes effective once entered in the National Court Register. A capital increase during an investment round requires the same steps anyway — a resolution, a deed, and registration. Amending the articles separately means repeating the costs and coordination work.
Costs you will incur twice if you do not take advantage of the round
| Cost item | Estimated amount |
|---|---|
| Notarial fee (for a capital increase of PLN 100,000) | approx. PLN 710 net + VAT + certified copies |
| Court fee for amending the register entry | to be verified following the amendment of 29.11.2025 |
| Announcement in the Court and Commercial Gazette | approx. PLN 100 |
| Tax on civil-law transactions (0.5% of the tax base) | depends on the amount of the capital increase |
| Coordinating the shareholders’ attendance | time and logistical costs |
Source: biznes.gov.pl — change in share capital, Regulation of the Minister of Justice of 28.06.2004 on notarial fees.
That is why an investment round is the only sensible time to clean up the articles. Every amendment you want to make — removing a clause, raising a threshold, or adding a sunset provision — should be included in the same set of minutes.
What can really derail the transaction timeline
The mechanics of the notarial and registration procedures look straightforward on paper. In practice, this is precisely where investment rounds are delayed — sometimes by an entire quarter.
The order that cannot be changed
- A resolution of the EGM (extraordinary shareholders’ meeting) recorded by a notary — with the capital increase and amendment of the articles of association covered by separate resolutions.
- The new investor’s declaration to subscribe for shares — made before a notary.
- Payment of the cash contribution into the company’s bank account.
- Delivery to the company of a scan of the deed and confirmation of the transfer.
- An application to register the amendments in the National Court Register — only after steps 1–4 have been completed.
An application filed prematurely — without a subscription declaration or confirmation of payment — will result in a request to remedy the deficiencies. That means several more weeks of delay.
Five common causes of delays
| Cause | Time cost |
|---|---|
| No confirmation of the draft documents from the founders | 5 weeks (despite two reminders) |
| No available notary appointments during the holiday season | 2–4 weeks |
| One missing power of attorney with a notarized signature | 1–2 weeks |
| Procedural misunderstanding (e.g. looking for the consolidated text as a separate file when it is included in the resolution) | an additional round of correspondence |
| Premature application to the National Court Register | weeks to remedy the deficiencies |
In the case under review, the draft minutes prepared in July were not sent to the notary until late September — approx. 2.5 months later.
Powers of attorney — a bottleneck that can be eliminated
Article 243 § 1 of the Commercial Companies Code requires a power of attorney to be in writing on pain of invalidity. It does not require a notarial deed. Article 25(2) of the eIDAS Regulation gives a qualified electronic signature the legal effect of a handwritten signature.
But be careful: not every notary will accept a power of attorney provided solely as an electronic file bearing a qualified signature. There is no uniform practice. The safe approach is to agree with the particular notary how the power of attorney should be presented before the meeting. If it is signed by hand, allow time for the original to be delivered.
Collect powers of attorney while the minutes are being drafted — not after the drafting has been completed. With institutional shareholders (a fund or ASI), obtaining the signature of a person authorized to represent the entity may take longer than you expect.
How to protect yourself during the first round
If you are only now negotiating an investor’s entry, you have leverage that you will not have later. Several mechanisms should be included in the documentation from the outset.
- Sunset clause — a provision in the articles of association under which a right automatically expires upon a specified event (e.g. the next capital increase) or after a specified period. It is cheaper to arrange for a right to expire in advance than to negotiate its removal later. Remember, however, that a “sunset clause” is not a mechanism expressly defined in the Commercial Companies Code — its effectiveness depends on the precision of its wording and the type of right involved (Commercial Companies Code — consolidated text).
- Reasonable thresholds in the reserved matters — a PLN 25,000 threshold for disposing of assets may appear harmless at the seed stage. At the scale-up stage, it obstructs day-to-day operations. Set thresholds that make sense in light of the company’s planned growth.
- A 1× non-participating structure as the starting point for the liquidation preference — an uncapped participating multiple is economically aggressive and, in a mid-value exit, may mean that the founders and the new investor receive nothing. The literature on liquidation preference structures includes, among others, Balcarek, “Ius Novum” 2022.
- An undertaking in the investment agreement to vote in favor of expiry — an alternative to a sunset clause. It operates only between the parties and does not amend the articles of association automatically, but it provides a basis for demanding performance of the obligation.
Be aware of restrictions arising from public funding programs
If your investor is a fund operating under a PFR Ventures, NCBR, BRIdge, or other program involving public funds, it may not be free to waive certain clauses. The PFR Ventures documentation defines binding terms of the investment agreement, and violating them may result in funding being refused or an obligation to repay the funds. The restriction is contractual rather than statutory — but it is equally binding on the fund.
Before negotiations, ask the fund directly whether any of its rights arise from the requirements of a public funding program and cannot be modified.
The new investor’s perspective — what it sees during due diligence
A new investor joining a company in which the previous fund holds an extensive package of rights sees two things.
First — a restriction on its own economic position. The existing liquidation preference reduces the amount available to the new investor when the exit price is low or moderate. Article 174 § 3 of the Commercial Companies Code permits shares to carry preferences regarding dividends, voting rights, and participation in assets upon liquidation — but the order of priority depends on the corporate documents, not the chronology of the investment rounds.
Second — a restriction on operational control. Reserved matters, a conditional quorum, and the previous fund’s personal right to dismiss management board members mean that the new investor is joining a company in which decisions depend on someone else’s consent.
Before agreeing the valuation, the new investor should have a complete cap table and a waterfall model covering at least three scenarios:
| Scenario | What to check |
|---|---|
| Exit below the aggregate preference amount | How much of the exit proceeds goes to the previous fund, how much to the new investor, and how much to the founders |
| Exit equal to the aggregate preference amount | Whether the new investor receives anything beyond the return of its investment |
| Exit significantly above the preference amount | How the participating structure works — whether the fund receives both the preference and a pro rata share |
If the new investor discovers the extent of the previous fund’s rights only during due diligence, it will renegotiate the valuation or the terms of its investment. It is better to prepare this analysis yourself before the other party does it.
How we can help
Preparing an inventory of the fund’s rights, negotiating the scope of the amendments, and completing the notarial procedure are three separate stages — each with its own risk of delay.
We support post-round companies in three ways:
- Inventory of rights and a list of realistic proposals — we compile all of the investor’s rights section by section, divide them into layers, and identify which ones can realistically be negotiated. You receive a table and a recommendation on what to raise with the fund.
- Inventory, negotiation of the scope of amendments, and draft minutes and resolutions — we negotiate the scope of the amendments with the fund, draft the EGM minutes with separate resolutions (for the capital increase and the amendment of the articles of association), and prepare the consolidated text.
- Managing the entire investment round — from arrangements with the fund, collecting powers of attorney, and coordinating the notary appointment, through the notarial procedure and the share subscription declaration, to the application to register the amendments.
If you are preparing for another investment round and want to know what can be changed in the articles of association — contact us.
Summary: an investment round is a window for negotiation — use it wisely
The fund’s rights under the articles of association are not a monolith. They fall into layers with different levels of strength and susceptibility to negotiation. Sanctions against the founders — a put option and redemption at a premium — are mechanisms that the fund will give up relatively easily. The liquidation preference, reserved matters, and control over the management board are rights that will remain.
An investment round is the only sensible time to clean up the articles of association. Amending them separately means repeating the costs and coordination work. But to take advantage of this window, you need three things: a complete inventory of the rights, a map of negotiation priorities, and a procedural timeline that will not slip by an entire quarter.
If you are preparing for another investment round — contact us. We will help you review the articles of association, determine what can be changed, and handle the entire process from the initial draft through registration.
Frequently asked questions
Which fund rights can be negotiated during the next investment round?
You have the best chance with rights from the sanctions layer — the put option and voluntary redemption at a premium. They are costly to litigate, rarely triggered, and damage the relationship. The fund gives them up first because their absence does not change its economic position. You can also negotiate higher thresholds in the reserved matters and limit the conditional quorum to selected matters.
Why will the fund not give up its liquidation preference?
The liquidation preference determines the return on investment. When the company is sold, it determines how much money the investor receives before anything is paid to the founders. Removing the preference changes the economics of the entire investment — which is why the fund will not negotiate it away. If you want to influence its structure, do so during the first round by pushing for a 1× non-participating preference.
Can I amend the articles of association without the fund’s consent?
Amending the articles of association requires a shareholders’ resolution. If the articles require a conditional quorum (the fund’s presence) or unanimity for amendments, you cannot adopt a binding resolution without the fund’s consent. Even if you hold a majority of the votes, the fund can block the amendment by staying away or voting against it.
How long does a capital increase combined with an amendment of the articles of association take — from the initial draft to registration in the National Court Register?
In the case under review, approx. 2.5 months passed between the preparation of the draft minutes and the notarial procedure. The main causes of delay were the time needed for shareholders to approve the drafts, a lack of available notary appointments, and the collection of powers of attorney. After the notarial procedure, additional time is needed for the share subscription declaration, payment of the contribution, and review of the application by the registration court.
Is it worth amending the articles of association outside an investment round to remove troublesome clauses?
As a rule, no. Amending the articles outside an investment round means repeating the costs of the notarial deed, registration fees, and the coordination required to ensure that all shareholders attend. An investment round requires the same steps anyway — a resolution, a deed, and registration — so it is the only sensible opportunity for a clean-up. The exception is where a clause obstructs the company’s current operations to such an extent that the cost of waiting for the next round exceeds the cost of making a separate amendment.
How can I protect myself during the first round so that I do not have to renegotiate all of this later?
Include a sunset clause in the articles of association — a provision under which selected investor rights automatically expire upon a specified event (e.g. the next capital increase). Set reasonable thresholds in the reserved matters that make sense in light of the company’s planned growth. And negotiate a 1× non-participating liquidation preference rather than a participating multiple, which, in a mid-value exit, may leave the founders with nothing.
