I set up a company with 1 share.
The company is now attracting investment for which we will offer, in total, 20% ownership of the company. These would be B Ordinary Shares - with the only difference from the A Class shares being that they don't carry voting rights.
In addition, I wish to give someone who has been working on this part-time (and will continue to do so), 5% of the company. However, in this case, a vesting-period of 3 years would apply with a cliff after 1 year.
As a result, I would retain 75% of the company; 20% will be given away within the month and further 5% will accumulate over 3 years.
How do I go from having 1 share issued to the above scenario?
Some things I need to consider:
a) I wish to avoid unnecessary tax consequences (eg, by splitting my share as opposed to issuing new ones)
b) The 5% vesting shares should revert to me, not the company, were they not to vest
c) I wish to 'future-proof' any further investment rounds (eg Series A investors)
One scenario I was considering was to issue 74 shares to myself (bringing me to 75), 20 to the new investors and 5 to an option pool which would vest. BUT, I'm not sure if the option pool can revert to me if unvested. More importantly, if the 20% shares for new investors was bought for, say, £100k, I don't know if that means that I have just given myself an asset now worth £350k and whether that then carries tax or other implications.
I know this should be easy, but I'm really perplexed.
I'll try to remain polite, but kind of crazy advice have you been receiving so far? You incoroporated a company with 1 share? This is unheard of. Is this a C corp (hopefully in Delaware, but not necessary)? Do you have any idea how complex of a structure you are trying to build by having two classes of stock ufront, just to give away 5%?
Just give away the 5% by splitting your share into one million shares. Don't worry about voting rights. You should be the sole director, that's what matters really.