Several years ago, I did work for a company (Delaware corporation). In return, I was issued some stock in exchange for handing over my IP rights.

Here's the relevant excerpt from the contract I signed:

As full and complete consideration for the assignment of the Work Product hereunder, the
Company will grant to Consultant <SOME SHARES> restricted shares of the Company’s common stock under
the Company’s <SOME YEAR> Equity Incentive Plan (the “Plan”) at a purchase price equal to the fair
market value of a share of the Company’s common stock on the date of grant (as determined by
the Board in its sole discretion). Such restricted shares will be fully vested on the grant date and
will be subject to the terms and conditions of the Plan and a restricted stock purchase agreement
to be entered into between Consultant and the Company.

I thought this was the end of the matter, and I now owned my shares in the company.

Recently, the founder contacted me, stating that I did not own the shares because while I signed a document stating that the company would give me shares, I did not sign a "Stock Grant Agreement" that would actually transfer the shares to me.

The founder states that in order for the stock options to be transferred to me, I would need to be an employee or contractor. The reasoning is:

At a high level, under U.S. securities laws a private company must generally issue securities (i.e., stock) pursuant to an applicable registration exemption. One of such exemptions is when issuing to an “accredited investor”, which is what we use, for example, when issuing shares to VC investors. But if someone is not an “accredited investor” then we rely on the Rule 701 exemption. However, the Rule 701 exemption only applies to service providers (i.e., employees or consultants) of the company. Thus, we need [my name] to be providing services to the company as a consultant in order to issue him shares pursuant to the Rule 701 exemption

Because of this, I'm required to go back into the office and work for a small amount of time in order to claim my stock.

I don't have an amazing understanding of the law, but it seems surprising the stock grant agreement cannot be written given that an agreement was already entered between the company and I to grant me some amount of stock.

Can someone tell me if the founder's reasoning is correct?

  • 4
    This is not something you should turn over to an assortment of random people on the internet. You need to speak to a lawyer. Jan 25 at 1:47


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