4 ms·

Restrictions on transferability is standard for a private company. Kudos if you are able to negotiate this but I think a small company would be crazy to agree t

Restrictions on transferability is standard for a private company. Kudos if you are able to negotiate this but I think a small company would be crazy to agree to this. It opens the door to a whole list of potential burdens for the company.

JumpCrisscross 11y ago
> Restrictions on transferability is standard for a private company A right of first refusal (ROFR) is a reasonable transfer restriction. So is a lock-up period, e.g. you may not sell these shares within N years of getting them. Bans, on the other hand, are not. For a common stockholder, requiring board approval is a cutesy way of saying "ban".
- ryanackley 11y ago
  You're basing this on what? Not saying your wrong but what is the basis of this opinion ? Employees usually get restricted stock until there is a liquidity event.
  - JumpCrisscross 11y ago
    "Restricted stock" means the securities are un-registered [1]. The minimum holding time is 6 months. All stock issued by a privately-held company is "restricted stock". Practically all other transfer restrictions are at the company's discretion. ROFRs are the only restriction I've seen widely enough to merit calling "standard". Everything else exists in different forms in different companies, all the way up to being wholly non-existent for some combination of employees, executives and institutional shareholders. My work involves helping private companies raise capital and investors (mostly institutions) sell privately-held positions. [1] http://www.sec.gov/investor/pubs/rule144.htm http://www.sec.gov/investor/pubs/rule144.htm
    - ryanackley 11y ago
      What I meant by "restricted" is that it's a restricted class of common stock. i.e. you don't have the same voting rights as the owner or investors in the company. Your experience is working with investors. Your advice makes more sense from that point of view. Employees are rarely (read Never) afforded the same privileges as the investors.
      - angersock 11y ago
        I think that this is a reasonable right to hope for. No need for us to boot-lick and perpetuate a minor injustice against employees and labor here...especially one that is causing long-term harm to the ecosystem.

JumpCrisscross 11y ago

> Restrictions on transferability is standard for a private company A right of first refusal (ROFR) is a reasonable transfer restriction. So is a lock-up period, e.g. you may not sell these shares within N years of getting them. Bans, on the other hand, are not. For a common stockholder, requiring board approval is a cutesy way of saying "ban".

ryanackley 11y ago
You're basing this on what? Not saying your wrong but what is the basis of this opinion ? Employees usually get restricted stock until there is a liquidity event.
- JumpCrisscross 11y ago
  "Restricted stock" means the securities are un-registered [1]. The minimum holding time is 6 months. All stock issued by a privately-held company is "restricted stock". Practically all other transfer restrictions are at the company's discretion. ROFRs are the only restriction I've seen widely enough to merit calling "standard". Everything else exists in different forms in different companies, all the way up to being wholly non-existent for some combination of employees, executives and institutional shareholders. My work involves helping private companies raise capital and investors (mostly institutions) sell privately-held positions. [1] http://www.sec.gov/investor/pubs/rule144.htm http://www.sec.gov/investor/pubs/rule144.htm
  - ryanackley 11y ago
    What I meant by "restricted" is that it's a restricted class of common stock. i.e. you don't have the same voting rights as the owner or investors in the company. Your experience is working with investors. Your advice makes more sense from that point of view. Employees are rarely (read Never) afforded the same privileges as the investors.
    - angersock 11y ago
      I think that this is a reasonable right to hope for. No need for us to boot-lick and perpetuate a minor injustice against employees and labor here...especially one that is causing long-term harm to the ecosystem.