Why it matters
Standard protective provisions cover structural events: changing share rights, raising new rounds, selling the company, dissolving. Expanded provisions creep into operations: "any single contract over $250k," "any new senior hire," "any change to the budget." These convert investor consent into operational micromanagement. You will spend more time managing your investors than your business, and they will say no enough times that you stop asking.
How to negotiate
Limit protective provisions to the standard NVCA list: changes to charter affecting preferred, dividend changes, new authorised stock, sales/mergers, dissolution, increases to option pool above an agreed cap. Push back hard on anything operational. If the firm insists on consent for hires or contracts, raise the dollar thresholds to a level that won't impede normal business (e.g. $1M+ for contracts, only C-suite hires for personnel).
Example language
How this clause typically appears in a term sheet. Read it carefully — predatory language is often buried in routine paragraphs.
So long as any shares of Series A Preferred remain outstanding, the Company shall not, without the consent of the holders of a majority of the Series A: (i) approve the annual budget, (ii) hire or terminate any officer, (iii) enter into any contract with consideration exceeding $100,000.
TURNSHEET provides intelligence, not legal advice. This page describes typical market behaviour and common negotiation tactics; your specific deal may have nuances that change the analysis. Always review your term sheet with qualified legal counsel before signing.