16/10/2026
Word of the Day: CLAWBACK ⚖️
In commercial law and venture capital, a Clawback Clause is your startup’s ultimate safety net.
It is a contractual mechanism that grants the company the right to retrieve previously allocated assets most commonly co-founder shares or executive equity—if specific trigger events occur (e.g., early departure, breach of contract, or termination for cause).
💡 Why Founders Need to Know This:
If a co-founder leaves 6 months into a 4-year venture, you don't want them walking away with 50% of your company’s equity.
Under Nigerian law, once shares are allocated on the CAC portal, reclaiming them without prior legal architecture is an uphill battle. A properly drafted Clawback & Repurchase Provision ensures unvested shares automatically revert to the company pool cleanly.
📌 Where you’ll usually find clawback provisions:
Share Vesting Agreements (recovering unvested founder equity).
Executive Employment Contracts (reclaiming performance bonuses if financial statements are restated).
Investment Term Sheets (protecting venture capital allocations).
Don't wait for a co-founder dispute to figure out how to recover equity. Structure your governance before you scale.
Have questions about your company’s cap table or vesting agreements?
💬 Drop a comment below or send us a DM to consult with our commercial practice team!