Legal Question in Investment Law in California

Legal binding investment agreement between friends

Myself and 3 friends have decided to invest in a startup company with an minimum investment of $250,000. Since the amount is too much for any one of us to invest by ourself, we decided to invest as a partnership where 2 of us are each investing 40% and the other two 10%. We would like a legally binding agreement that we can sign and each have a copy of just to make sure no problems occur a year or two down the road when one of more of us may want to liquidate his respective portion of the investment.


Asked on 3/12/02, 3:53 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Legal binding investment agreement between friends

You can certainly make such an agreement, and I could draft it for you. I strongly advise you to consider any transferability issues connected with the investment. Many private placement securities cannot be transferred without meeting tough requirements, and this could affect the partnership's ability, as holder of non-transferable shares, to serve the individual needs of the partners as they arise. In other words, there may be good reasons not to do this.

I will be traveling on business from 3/13 through 3/24, returning to my office Mon. 3/25.

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Answered on 3/12/02, 5:35 pm


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