Registration Rights
An investor's right to force a company to register their shares for public sale via the SEC.
Definition
Registration rights give investors the ability to force the company to register their shares with the SEC so they can sell on public markets. There are two types: demand registration (investors can compel an IPO registration) and piggyback registration (investors can include their shares in any registration the company initiates). These rights typically become relevant in late-stage and pre-IPO scenarios.
Why it matters
Registration rights can accelerate the timeline to a public offering, which would give you liquidity on your shares. In practice, demand registration rights are rarely exercised because forcing an unwanted IPO is impractical, but they give investors leverage in exit discussions.
Example
Major investors holding 40% of preferred shares invoke demand registration rights, signaling they want the company to start the IPO process. The company begins preparing an S-1 filing with the SEC.