West Lafayette Startup Attorneys & Lawyers

Key Takeaways:

• Reverse vesting secures a company’s interests by ensuring founders and key stakeholders stay engaged for a defined period.
• It differs from traditional vesting as the shares are owned upfront but can be reclaimed if terms aren’t met.
• Essential elements of reverse vesting agreements include cliffs, repurchase rights, and accelerated vesting clauses.
• The practice benefits investors, attracts funding, and maintains founder alignment with company goals.
• Reverse vesting agreements must balance fairness and tax implications for founders and companies.

Reverse Vesting: What Is It?

Reverse vesting occurs when a company's co-founder receives his or her shares and ownership interest upfront. This exchange is subject to vesting similar to employee stock options. If the co-founder leaves, the company may repurchase a set amount of those shares.

The founder already owns all t

What is Your Principal Place of Business?

This question is not as simple as it sounds. For a sole proprietor or a one-location company, the answer is straightforward – your principal place of business is your home, shop, office, or wherever you primarily do business. But large companies and corporations often have several locations spread out across the country, or even around the world. In these situations, the company headquarters is usually the principal place of business. This is not necessarily the same state as the state of incorporation.

The supreme court finally ruled that the “nerve center” of the company is the principal place of business. The nerve center test refers to the single place where a corporation’s officers direct, control, and coordinate the corporation’s activities. In practice, it is usually whe