| name | management-rights-letter |
| title | Management Rights Letter |
| description | Drafts management rights letters for VC/PE equity investment closings, granting investors contractual consultation, inspection, and information rights. Ensures VCOC qualification under ERISA plan asset regulations (29 CFR § 2510.3-101). Use when drafting management rights letters, VCOC qualification letters, or investor side letters at closing. |
| author | CaseMark |
| author_url | https://github.com/CaseMark/skills/tree/main/skills/legal/management-rights-letter |
| license | Apache-2.0 |
| version | 0.1.0 |
| execution_mode | open |
| jurisdiction | us |
| practice | investment-funds |
| language | en |
| tags | ["corporate","drafting","letter"] |
Management Rights Letter
Drafts a letter granting an investor contractual management rights in connection with an equity investment, primarily to qualify the investor as a venture capital operating company (VCOC) under ERISA.
Quick Start
Gather before drafting:
- Parties — full legal names and addresses of investor and portfolio company
- Investment terms — series/class of preferred stock, amount, closing date
- Term sheet or investment agreement — for any negotiated rights beyond the standard set
- Notice provisions — delivery requirements from governing documents
Flag any gaps before producing a draft.
Document Structure
Formal business correspondence in this order:
| Section | Content |
|---|
| Header | Date, investor name/address, company name/address |
| Subject line | "Re: Management Rights" |
| Recitals | Identifies the investment (series, class) and confirms agreed rights |
| VCOC purpose clause | States rights ensure VCOC qualification under 29 CFR § 2510.3-101 |
| Enumerated rights | Numbered list of management rights |
| Protective provisions | No-waiver clause, termination provision |
| Signature blocks | Company ("AGREED AND ACCEPTED:") then investor ("Sincerely,") |
Standard Management Rights
Include at minimum unless the term sheet modifies:
- Visit company facilities during normal business hours
- Consult with and advise management on business and affairs
- Examine books and records
- Receive copies of all documents and information provided to the Board
Check term sheet or side letter for additional negotiated rights (e.g., board observer, budget approval, key hire consultation).
Required Protective Provisions
- No-waiver — failure to exercise does not waive future exercise
- Termination — rights end when investor no longer holds any company securities
Pitfalls
- VCOC clause is mandatory — omitting it undermines the letter's primary function
- Series designation must match investment documents exactly
