A provision in the venture capital fund's investment contract that limits the firm's ability to sell assets without prior investor approval is an example of

Question

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A negative covenant is a provision in a contract that restricts or limits certain actions by one or both parties. In this case, the provision limiting the fund's ability to sell assets without investor approval is a negative covenant. A ratchet provision refers to a clause that allows the investor's ownership percentage to increase if certain performance metrics are not met. Positive covenants are provisions that require a party to take certain actions, and participation rights provisions relate to the allocation of future profits or distributions.

A Provision in the Venture Capital Fund's Investment Contract That