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The best articles of incorporation I saw had preferred stock for the founders, but any acquisition or liquidity change would convert all preferred shares to com
by jpollock 11y ago
The best articles of incorporation I saw had preferred stock for the founders, but any acquisition or liquidity change would convert all preferred shares to common 1:1 and instantly vested all options.
It did cause some interesting tax issues for people when we were bought, but I don't think I'd sign any other set of terms now.
But then, the founders were very classy.
- antoinevg 11y agoGenius :-)
- balls187 11y agoBy having multiple classes of stock, the founders were unable to take advantage of pass-through taxation via S-Corp Designation. The losses incurred by a company at early stages offset personal tax liabilities by a significant amount. Having an acceleration clause isn't anything out of the norm though. I negotiated an acceleration clause if upon we took qualified investment of a certain dollar amount.
- jpollock 11y agoThis wasn't a US firm, so US tax laws wouldn't have applied. I'd definitely consult a local accountant when setting up a company.