Bad Actor Disqualifications Clause Samples
The Bad Actor Disqualifications clause serves to prevent individuals or entities with a history of certain disqualifying events—such as securities law violations, fraud, or other misconduct—from participating in a transaction or benefiting from an agreement. In practice, this clause typically requires parties to disclose any past criminal convictions, regulatory sanctions, or similar issues, and may automatically exclude those who fail to meet the specified standards. Its core function is to protect the integrity of the transaction and ensure compliance with legal and regulatory requirements by screening out participants who pose heightened risks.
Bad Actor Disqualifications. Such Investor represents on its behalf and the behalf of its officers, directors and principal stockholders, that neither such Investor nor any of its officers, directors and principal stockholders are subject to any “Bad Actor” disqualifications described in Rule 506(d)(1) (subject to Rule 506(d)(2) and 506(d)(3)) with respect to the Company.