Revoking a Partner's Equity


2

I am involved in a startup and one of our minority partners (owns 15%, vested 25% of that 15% with the rest over the next two years) is not meeting his side of the agreement.

I think we have the authority, within our partners agreement, to kick him out. Is there a way we can also take back his equity to have on hand for his replacement?

Background:

The company had not been legally formed yet. We have a collaborator's agreement holding everything together and will be forming the company in the next month or so.

Partner Equity Founders Agreement

asked Aug 17 '12 at 06:04
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Steve
11 points
  • Jurisdiction? How are you planning to recover the vested portion? – Littleadv 6 years ago

1 Answer


4

Go see a good lawyer. There is nobody here who can answer your question. It all depends on the exact wording of that "collaborator's agreement" you mention, and relevant legal precedence in your jurisdiction.

In general it's extremely unusual to retroactively attempt to take back ownership. Think about what that could do to your reputation, and think about the potential for lawsuits from him later on.

Why not let him keep his current 3.75% and push for him to perform the already promised work instead?

The words you're using are a bit off. You say "equity", but you're also saying "company has(?) not been ... formed yet". Again, go see a good lawyer.

answered Aug 17 '12 at 11:37
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Jesper Mortensen
15,292 points

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Partner Equity Founders Agreement