Protective provisions ‘protect’ an investor’s rights such as their ability to veto a decision or action that they do not agree with—e.g. the issuance of more stock, the liquidation of the company, or the acquisition of the company. Protective provisions mitigate risk for investors and help protect the interests of minority shareholders in the event that there is a disagreement regarding the best course of action for the company.Before you sign a term sheet it is imperative that you understand the protective provisions that your potential investors expect—do not agree to terms that you do not understand or have not discussed with your council.