Share Vesting provides for the forfeiture of shares when major equity holders cease to provide services to the venture before fulfilling their agreed commitment.
Share vesting is crucial between founders to ensure that large shareholdings are linked to the upfront commitment made by each founders. Without share vesting in place, should a founder leave, there is no mechanism to take back any of their equity.
Share vesting should be used to underpin the promises made between founders, and then later between investors and founders. We advocate for share vesting to be handled externally to any shareholder agreement or constitution, to retain some flexibility to renegotiate if circumstances change that shouldn’t render a founder losing equity.
Share vesting puts existing shares at risk of forfeiture (as opposed to “drip feeding”) – so that at each vesting date, a portion of the founder’s shares are released from the risk of forfeiture. Share vesting is a different concept to shareholders or a company buying back equity from a founder that departs in bad circumstances (ofter referred to as a defaulting shareholder).
Share vesting should go hand in hand with a founder services agreement so that there is a clear written understanding of the service expectations of founders.
You get to speak to an experienced lawyer to guide you on the vesting events.
The share vesting agreement is tailored to your specific requirements.
We make sure the document is signed by the founders at the right time.
You have a professional document re-usable for the future.