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I'm probably missing something obvious but if all the founders have vesting schedules who actually owns the company initially? Surely there must be a legal enti

I'm probably missing something obvious but if all the founders have vesting schedules who actually owns the company initially? Surely there must be a legal entity that technically owns the shares even if they are contractually obliged to distribute them on the vesting schedule. With regards to documentation of loans to company and things like that is having it recorded as a company liability (to the named entrepreneur) in the accounts sufficient or was it more formal than that?

danoprey 12y ago
Technically, it actually works the other way around from vesting. Instead of you having 0% of your shares and working your way up to 100%, you start with 100% of your shares but the company has a Repurchase Right to buy back shares from you for (effectively) nothing. They incrementally lose this right until they have the right to repurchase 0% of your shares, which is when you are "fully vested".
patio11 12y ago
Ask your lawyer if you need clarification, but my understanding is that vesting is typically actually instantiated as a contractual term which describes the company as having a right to repurchase shares at par value or either repurchase or cancel options. For example, my LLCs have 10 million shares issued at par value 1/100th of a cent each. I own them outright. If for some reason I wanted to do a vesting agreement, I'd agree to the company having the option to purchase up to XYZ shares from me at par, with XYZ being any number up to and including the number defined by $VESTING_FORMULA_GOES_HERE. With regards to documentation of loans to company and things like that is having it recorded as a company liability (to the named entrepreneur) in the accounts sufficient or was it more formal than that? I figure as long as you're going to write it in the books of the company you might as well write a piece of paper saying "$COMPANY agrees to, at a date of its choosing within 10 years of the inception of this agreement, repay to $FOUNDER the sum of $SUM plus 5.0% annualized interest." Sign twice (once in personal capacity, once as authorized representative of company), date, file for later.

danoprey 12y ago

Technically, it actually works the other way around from vesting. Instead of you having 0% of your shares and working your way up to 100%, you start with 100% of your shares but the company has a Repurchase Right to buy back shares from you for (effectively) nothing. They incrementally lose this right until they have the right to repurchase 0% of your shares, which is when you are "fully vested".

patio11 12y ago

Ask your lawyer if you need clarification, but my understanding is that vesting is typically actually instantiated as a contractual term which describes the company as having a right to repurchase shares at par value or either repurchase or cancel options. For example, my LLCs have 10 million shares issued at par value 1/100th of a cent each. I own them outright. If for some reason I wanted to do a vesting agreement, I'd agree to the company having the option to purchase up to XYZ shares from me at par, with XYZ being any number up to and including the number defined by $VESTING_FORMULA_GOES_HERE. With regards to documentation of loans to company and things like that is having it recorded as a company liability (to the named entrepreneur) in the accounts sufficient or was it more formal than that? I figure as long as you're going to write it in the books of the company you might as well write a piece of paper saying "$COMPANY agrees to, at a date of its choosing within 10 years of the inception of this agreement, repay to $FOUNDER the sum of $SUM plus 5.0% annualized interest." Sign twice (once in personal capacity, once as authorized representative of company), date, file for later.