TOFI August 10, 2015 Legal: Hassan
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Transcript of TOFI August 10, 2015 Legal: Hassan
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Corporate Law for Founders… a founder’s perspective
Kamal HassanCEO, Incmind
Aug 10, 2015
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Sole Proprietorship
Partnership
Corporation
- you own 100%
- partners jointly liable
- sell shares, give options
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Shareholders
Board of Directors
Officers
Corporation
Run things
Liable
Protected
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Who owns/controls the company?
What does the company own?
Risk of any lawsuits?
Only three legal questions really matter
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Who owns/controls the company?
What does the company own?
Risk of any lawsuits?
Good governance for private companies
Governance
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Who owns the company?
“Cap Table”
Minute Book
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Who owns the company?
“Cap Table”
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Do you really own your company?
Debt holders get paid first
Common shareholders last
Preferred shareholders next
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Financing terms matter … valuation is for suckers
Debt holders get paid first
Common shareholders last
Preferred shareholders next
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Who controls the company?
“Any shareholder with >12.5% of theshares has the right to name a director”
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Who owns/controls the company?
What does the company own?
Risk of any lawsuits?
Only three legal questions really matter
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What does the company (really) own?
Assets
Knowledge
Relationships
Possession (and contracts )
IP transfer, NDA, non-compete ( contracts )
Contracts
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Local Laws
(i) is contract legal?(ii) if there is no contract
[A] promises to [give X] [to B]
Contracts
[if B does Y] … if … and … if …... if … before … by … and …
Local Courts (or Arbitrator)
Contract = a (written) agreement/promise
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For funding you will share your contracts in a data room
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Who owns/controls the company?
What does the company own?
Risk of any lawsuits?
Only three legal questions really matter
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In compliance with laws?
Complying with contracts?
Contracts cover everything?
Risk of any lawsuits?
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Contracts … between friends?
I’m working harderand you have more
I’m tired of this, andso is my husband
I can’t take thisany more, I quit
Signs happily Signs awkwardly Renegotiates See you in court
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Cofounders? Vesting!
VestingIf I or my cofounder leave the company, for anyreason, before February 1, 2019, the company
has the right to buy back our ‘unvested’ sharesat the same price we paid for them.
www.incmind.com/blog
4 year vesting, 6-12 month cliff
If you have investors
… then No!
Shotgun?
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Who owns/controls the company?
What does the company own?
Risk of any lawsuits?
Only three legal questions really matter
-
Shareholders
-
(Board of) Directors
-
Officers
-
financing terms
-
Contracts
Minute Book
Data Room
-
Contracts for important stuff-
Vesting for shareholders
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Founder Institute Perspective
You promised to issue 3.5% warrants to Founder Institute•
1% to grads (you), 1% to mentors, 1.5% to Founder Institute
•
if you drop out post Aug 24th FI decides if they want to keep
you in the warrant pool or not (if think you’re weak = no)
Warrants require a corporation (new or existing):•
warrant signing deadline: Aug 24th at 5:00 pm
•
need your corporate number first (register by Aug 20th)
Sign and upload the warrant documents
•
board consent = you have power to sign•
no negotiation on terms (too hard to track)
•
FI global reputation = must act in good faith
Kamal camping Aug 13th - 23rd : ask now or read above