I'm the co-founder of a SaaS company (startup) that's been around for 9 years, no VC funding, and no Vesting Agreement in place. We currently have ~20 employees, but main leadership and other shareholders are all from the same family (not mine). I have 15% equity in the company per our OA. TC is currently >100k (as the lead front-end/UX engineer) but that only kicked in earlier this year. No compensation for the first 5 years of operation, so a lot of time has been invested up to this point all around. I've been suffering years of escalating abuse from the majority shareholder/cofounder. Including: name-calling, yelling, cutting off me and others on calls, piling on responsibilities, questioning work ethic with no basis, chastising in front of other employees, and just general bullying. I've outgrown the company at this stage, and find the direction the business is going in to be misaligned with my morals and interests. There is a very poor WLB, no health insurance, and lack of proper management and organization IMO. Morale with other employees is low, and communication is deteriorating rapidly. My co-founder wants me out and no longer wants to pay me, and proposed demoting me to work on contract, or he'll be "taking it to the board for a vote". I decided it would be in my best interest to remove myself from my position at the company, from an employment standpoint, and will be discussing a transition period with the rest of the leadership team. I no longer want to be involved or be exposed to him moving forward, but am very much interested in keeping my shares given my dedication to the company for so long. My question to all of you is what can I expect when it comes to my equity? I've been told this does not have anything to do with that (both from shareholders and lawyers), but as I won't be contributing to the business and leadership duties, should I be worried about the other shareholders trying to force me to give these up? Has anyone else been in a similar situation? Any advice in general? This situation sucks all around, but I believe it's best for me and the company that I remove myself from the day-to-day operations and move on, aka: GTFO!
If you are not aligned with the leadership why do you want to keep your Shareholding Its like investing in a company where you dont trust the CEO
Because I know the other shareholders are interested in selling (me included) and I’d like to see that payout.
Check this https://www.nytimes.com/2015/12/27/technology/when-a-unicorn-start-up-stumbles-its-employees-get-hurt.html You may get screwed.
Hmm, interesting read, but we're not a publicly traded company and I didn't have to purchase my equity, so I'm failing to see how this would apply in my situation?
You did purchase your equity... You think 5 years of your time with no pay is free? You really need to value your time better if you do think that way.
Hire a lawyer and discuss your options
This is the right answer. Get a Lawyer.
Did this!
Get a Lawyer
Don't sign anything yet. Don't remove yourself, that solves his problem. Have a lawyer review your equity docs first and decide what price you would accept if they tried to buy you out.
Haven't signed anything (and won't), but I've removed myself from the employment position as I'm uncomfortable continuing working, but I maintained my interest in wanting to see the company succeed.
Listen to your lawyer. Ownership and employment are two different things. If there is no equity buyback provision in your employment agreement, you can’t be forced to sell.
Nope, never signed an employment agreement.
It sounds like you should have talked to your lawyer before starting this venture.
If the company fails nothing, if it does well your shares will be deluted or removed.
How would they get removed? And dilution isn’t necessarily a bad thing.
Change the class of shares, change the company (reincorporate), dilute only ex employees. Lots of ways. For small startups you usually gotta be in it to win it.
I’m a startup lawyer. If you own your shares and there are no vesting conditions, they can’t take away your shares. The most they could do is try to dilute your interest down by issuing more shares. I would say keep your shares and keep an eye on the company. If they eventually reach an exit, make sure you get paid. You could also try to sell your shares back to the company, to the other founders, or to some other buyer (depending on if your shares have transfer restrictions). You do have some limited minority shareholder rights that you could talk to a lawyer about if the other founders are really being unfair.
You’ll probably get nothing from the equity. Sorry.
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As far as I understand they can't force you to do anything with your shares