Reporting obligations
Reporting obligations in the start-up ecosystem pertain to the requirements and com-mitments of founders and management to provide relevant and timely information to investors and stakeholders. These obligations are often agreed in shareholders' agree-ments and typically encompass:
Financial reporting: This includes disclosure of financial statements (income state-ments and balance sheets) and cash flow reports, offering investors insights into the company's financial performance.
Operational updates: Ongoing operational updates help investors understand the day-to-day progress and challenges faced by the start-up, ensuring transparency.
Legal and compliance disclosures: Sometimes start-ups are obliged to disclose any le-gal issues, disputes or regulatory changes that may affect their operations.
Use of funds: Start-ups are expected to account for how investment capital is being utilised, detailing the allocation of funds for different business activities.
Reporting obligations are essential for maintaining trust and keeping stakeholders in-formed about the start-up's financial health, operational progress and potential risks.
Information rights
Information rights refer to the legal entitlements of shareholders, particularly in an Austrian limited liability company (GmbH), to access and obtain information regarding the company's affairs. These rights are granted to individual shareholders irrespective of their ownership stake. In contrast to the Austrian Stock Corporation Act, the GmbH Act in Austria provides for comprehensive information rights of shareholders and shareholders have the right to inspect business documents. These rights ensure transparency, accountability and a means for shareholders to stay informed and exercise oversight in the company.
Reporting obligations are typically requested and implemented during a financing round, where investors demand a regular reporting format for key metrics. In contrast, information rights are fundamental rights that are always present for every shareholder, always ensuring transparency and access to company affairs.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.