QUESTION:
I’m looking for founders’ stock purchase agreements to use for my startup. Do you know where I can find any documents like these?
ANSWER:
by Naomi Kokubo, Cofounder of Founders Space
Below is a link to the Founders’ Stock Purchase Documents provided by Orrick. You need to check with your counsel to make sure these work with your company.
Go see Founder’s Stock Purchase Docs
Common Stock Purchase Agreement (with Vesting)
This agreement allows the founders to document their initial ownership in the Company, including standard transfer restrictions and any vesting provisions with respect to their shares.
Common Stock Certificate
This certificate is used to document each stockholder’s capital stock and includes important legends regarding, among other things, restrictions on transfer, etc.
Capitalization Table
This Excel file is a template for keeping track of a very sophisticated capitalization structure that will not immediately be applicable to a new start-up company that does not yet have several rounds of preferred stock financing under its belt. It is designed, however, to be used from day one, and the advanced features will be there when you need them.
Stock Ledger
This document allows you to record every stock certificate issued by the Company in the numerical order of the stock certificate numbers. If a stock certificate is cancelled or transferred, such transactions should be recorded in the Stock Ledger. This will be the history for each stock certificate sorted by number. You should discuss with your counsel whether the Company or counsel should maintain the “official” stock ledger.
83(b) Election Form
Many founders wish to make an 83(b) election in order to preserve possible future taxation benefits. A Section 83(b) election is an election to include in income the value of property which is subject to a substantial risk of forfeiture, such as a Company repurchase right in the purchase agreement, which repurchase right lapses over time as a founder provides services to the Company. Because the stock is subject to a substantial risk of forfeiture, the founder does not have to pay tax on his receipt of the stock until it vests. Often a founder may make a Section 83(b) election to pay tax on the value of the stock today because its value is lower than it is expected to be when the repurchase right lapses, or because the founder paid full value for it at the time of purchase so the Section 83(b) election incurs no additional current tax. The making of the Section 83(b) election also starts the founder’s capital gains holding period. Access additional information about making the election.
25102(f) Notice
Companies selling stock must comply with state and federal securities laws. Non-compliance can lead to lawsuits by investors and civil or even criminal prosecution by government agencies. Frequently the offering is structured to fit within exemptions to the laws that generally require registration of the securities. A common exemption for securities sold to founders in California is found in Section 25102(f) of the Corporations Code. Access additional information to make a filing.
NOTE: Before making any business decisions based on information on this site, it is your responsibility to check with your counsel or professionals familiar with your situation.
Leave a Reply