Due to investors being in different stages in the raise (i.e.: some investors are not countersigned, others have the first round of shares issued), each chargeback situation is different. Despite these differences, each chargeback can have long-standing consequences that can drastically affect your company.
If a chargeback is initiated by an investor but not appropriately handled, this can lead to a potential situation where the company’s capitalization table is incorrect, shares are distributed but not paid for, and your company may draw the attention of financial regulatory bodies.
Furthermore, this could cause an issue with a Rule 15c2-11 audit and it may impact your company’s ability to go public in the future.
Since chargebacks generally have a two-week window where your team can address the situation, it is critical that your team move quickly to decide the best course of action.
See here for more information What is a chargeback?
See here for more information How we should handle a chargeback?