Pari Passu

Pari passu (Latin: "on equal footing") means that multiple parties share equal rights, ranking, or priority. In startup financing, it typically means that investors at the same funding round have identical liquidation preferences, anti-dilution rights, and distribution rights — nobody in the round has superior terms.

When shares are issued pari passu, all holders at that class level are treated equally in any distribution, liquidation, or rights exercise. This matters in down rounds and acquisitions where the order of payment and the relative treatment of different share classes determines who gets what.

Pari passu provisions prevent late-arriving investors in a round from negotiating superior terms to earlier investors — ensuring fairness within the same round's investor group.

In Indian term sheets using CCPS (Compulsorily Convertible Preference Shares), pari passu typically means all CCPS holders at the same round rank equally in liquidation preference. However, different rounds have different ranking (Series B preference ranks above Series A preference in most liquidation waterfall structures).

Indian founders sometimes encounter "super pro-rata" or "enhanced rights" requests that break the pari passu structure within a round — where one investor asks for better terms than others at the same price. This creates cap table complexity and signals an investor who may cause future governance friction.