12 Apr 2021

A common provision in a dress schedule is when the shares are over a four-year period with a one-year pitfall. This means that if the employee or key man has worked for the company for one year, 25 per cent of his shares are transferred. After two years of service, 50 per cent of the workforce is spent. After three years of service, 75% of the workforce is spent. And after four years, 100% of the workforce is transferred to free movement. One solution to this problem is to sign all the shares in advance, but to retain the right to repurchase them (“buyback clause”) by the shareholder contract at face value (i.e. the price they were worth when the shares were first signed to the co-founder), if the shareholder leaves or delivers too short, and you ask them to leave. Over time, the company reserves the right to repurchase fewer shares until the shareholder is fully bound. This is called reverse vesting. Once an employee`s actions have been disoriented, the employee can generally keep the stock unconditionally. There is no obligation to resell the shares to the company, even if the employee no longer provides his services to the company. This is due to the fact that the employee is considered to have earned these shares, usually assuming a lower salary during the blocking period.

In short, Vesting is a great way to engage shareholders and make sure they feel indebted to the company before they engage too far in the process. This is the best way to protect yourself from the risk of losing shares on someone who is no longer mentally and physically invested in a business. But before you think about the Vesting procedure, we recommend that you confirm your share of shares with your co-founders. There are a number of factors to consider, such as skills, past experiences, added value for the company and the level of commitment of each founder. If you create a business with more than one shareholder, investing in a shareholder contract is without a doubt one of the best decisions you will ever make. The reality is that the co-founders are just human beings. People are very different in the way they work, their visions, their willingness to change direction, their talent for selling their product and their ability to do things. They also have families, divorce their partners and decide to drop everything and go on a trip. Shareholder relationships are like any other human relationship, which means they change. A shareholder contract will help protect your business from any changes.

When defining the free movement agreements that your company will take and whether they will be the same for each founder or employee: The following tables contain typical vesting calendars over a period of 3 and 4 years: as mentioned above, the installation plans are not recognized in English law, there are tax implications and impractical when they have a vesting schedule in their own American company. , that is, where the shares are actually in society. Immediate disposal: will some of the shares be transferred to the founders or employees at the beginning of the sale? This situation is relatively unusual, especially with regard to creative shares, as investors expect free movement agreements. Anyone holding shares in a company should have freedom of movement.