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A Pro-rata side letter to Investment agreement gives existing investors the right to maintain their ownership percentage in future funding rounds under Belgian company law. It protects investors from dilution by allowing them to buy new shares in proportion to their current stake when the company raises additional capital.

This agreement typically comes into play during Series A or later investment rounds in Belgian startups and scale-ups. It outlines specific terms like notification requirements, exercise periods, and any exceptions to these participation rights. The Belgian Financial Services and Markets Authority (FSMA) recognizes these rights as standard investor protections in private equity deals.

Use a Pro-rata side letter to Investment agreement when you're leading an initial investment round and want to secure your right to participate in future fundraising. This is especially crucial for Belgian venture capital firms and angel investors who aim to maintain their ownership percentage as startups grow and need additional capital.

The timing matters most when negotiating your first major investment in a Belgian company, particularly if you anticipate multiple funding rounds ahead. Early-stage investors who skip this protection often find themselves unable to maintain their stake when larger investors enter later rounds. Under Belgian corporate law, having this agreement in place before the first investment closes provides the strongest legal protection.

• Basic Pro-rata side letter: Grants simple participation rights in future rounds, typically used by angel investors in Belgian startups
• Full-rights Pro-rata: Includes detailed notification procedures and extended participation windows, common in venture capital investments
• Qualified Pro-rata: Contains specific conditions or caps on participation rights based on minimum investment thresholds
• Sunset Pro-rata: Includes time limitations or expiration triggers for the participation rights
• Industry-specific Pro-rata: Tailored versions for Belgian biotech, technology, or real estate sectors with sector-specific provisions

• Early-stage Investors: Initial shareholders who secure pro-rata rights to protect their ownership percentage in future funding rounds
• Venture Capital Firms: Investment professionals who typically request and negotiate these agreements as part of their standard deal terms
• Corporate Lawyers: Draft and review the pro-rata side letters, ensuring compliance with Belgian corporate law
• Company Founders: Sign and manage these agreements, balancing investor rights with future fundraising flexibility
• Board Members: Oversee implementation and ensure proper notification when new funding rounds trigger pro-rata rights

• Investment Details: Gather current ownership percentages, investment amounts, and share classes for all participating investors
• Participation Terms: Define the exact scope of pro-rata rights, notice periods, and exercise windows
• Company Information: Collect latest articles of association, shareholder register, and any existing investment agreements
• Trigger Events: Specify which future funding rounds will activate pro-rata rights
• Compliance Check: Our platform ensures alignment with Belgian corporate law requirements and FSMA guidelines
• Approval Process: Map out required board approvals and signing authorities

• Parties and Recitals: Full legal names of investors and company, plus reference to main investment agreement
• Pro-rata Rights: Clear definition of participation rights and calculation method for future share allocation
• Notice Requirements: Specific timeframes for company notifications and investor response periods
• Exercise Mechanics: Detailed process for exercising pro-rata rights and payment terms
• Termination Events: Conditions that end pro-rata rights, like minimum ownership thresholds
• Governing Law: Explicit reference to Belgian corporate law and jurisdiction
• Signature Block: Proper execution format under Belgian requirements

A Pro-rata side letter to Investment agreement differs significantly from a standard Investment Agreement. While both documents govern investment relationships, they serve distinct purposes under Belgian corporate law.

• Scope and Purpose: Pro-rata side letters focus specifically on future participation rights, while Investment Agreements cover the entire investment relationship, including valuation, governance, and exit rights
• Timing of Effect: Pro-rata side letters activate during future funding rounds, whereas Investment Agreements take effect immediately upon signing
• Legal Structure: Pro-rata side letters supplement the main Investment Agreement as an ancillary document, not a standalone contract
• Flexibility: Pro-rata rights can be modified or terminated without affecting the main Investment Agreement terms
• Party Involvement: Pro-rata side letters typically involve only specific investors seeking future participation rights, not all shareholders