

Ways To Keep Your Startup Out of Legal Trouble - mfaustman
http://venturebeat.com/2012/11/03/4-common-mistakes-that-can-get-your-startup-into-legal-trouble/

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speedmax
Founders need to pay attention to these details, you should get a lawyer
friend or reputable adviser to go over these things.

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ankit_b
Great article!

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rprasad
_Putting vesting on an founder’s ownership means that the company has the
right to repurchase part or all of a founder’s ownership should a founder
choose to leave prior to a certain date._

No, it doesn't. Unvested stock does not belong to the putative shareholder,
hence the company doesn't need to do anything to "repurchase" unvested stock.
Essentially, unvested stock is stock "promised" to an employee/investor if
they satisfy certain conditions. However, until such stock vests, it does not
actually belong to the employee/investor (legally or otherwise). Normally,
vesting conditions are simply length of employment (i.e., still be employed by
the company X months from now). If the vesting conditions are met, the
promised stock automatically "vests" and becomes the stock of the
employee/investor.

A right of first refusal regarding the departing founder's _vested_ stock is a
very different legal provision which is also a good idea. A right of first
refusal grants the company the first right to purchase the founder's shares
before he attempts to sell them to a third party.

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anticrastinator
Article is correct. Founder stock is owned by the founder subject to
repurchase right. Founder has legal and voting rights on the stock. Company
must actually pay the original purchase price back to repurchase if the
founder leaves. Note that this is different from options.

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rprasad
_Founder stock is owned by the founder subject to repurchase right._

A repurchase right is _a legally different concept from vesting_. Repurchase
rights only apply to vested stock.

Stock actually owned by a shareholder is vested stock. Stock only owned upon
the occurrence of certain conditions which have not yet occurred is "unvested"
stock. Unvested stock is not yet owned by the shareholder, and the shareholder
has no legal, voting, or other rights arising from such stock. Hence, the
company does not need to purchase it from the shareholder if the shareholder
leaves before the unvested stock has vested. Thus, the article is incorrect as
to what vested stock is.

It is possible to have stock vesting, acceleration, and repurchase rights
associated with a single grant of stock. Each of these is a separate legal
concept and each has different consequences.

