A SAFE financing will always need approval from the company’s board of directors. Under Delaware law, any material decisions affecting the company require board approval, which categorically includes anything involving equity issuances. So, make sure to solicit the approval of your board of directors in connection with issuing any SAFE(s).
A SAFE financing may also need approval from one or more classes of company stockholders, especially if there are preferred stockholders on the cap table. When you raise a preferred round, whether it is a Series Seed or Series D, the preferred stockholders typically demand certain rights called “protective provisions” that require their vote anytime the company decides to take certain actions.
One of the most common protective provisions asked for is that the company’s preferred stockholders (often, a majority) vote to approve the issuance of any additional preferred stock or convertible instruments, like SAFEs, that are convertible into additional preferred stock. If you are issuing SAFEs, it is, therefore, essential to check your most recent certificate of incorporation to see if you need to get stockholder approval.
You should also make sure that there are no rights in side letters, shareholder agreements, or other legal documents that may require separate approvals, or offer “most favored nation” (MFN) or pro rata rights in future financings. Although technically not an approval requirement, your company may want to ask investors with MFN or pro rata rights to waive those rights in connection with a SAFE financing.