If you are in a partnership business and one of your Co-founders leaves the company, your biggest problem should be what to do with his equity.

In fact, this causes untold headaches for many business owners as the departing shareholder can badly torment you with it.

But the truth is that If the shares were subject to a vesting schedule, your problem is half solved.

The exiting co-founder's shares or equity will be dealt with based on the terms of the shareholder's Agreement, particularly the share vesting schedule.

If a founder leaves the company with a large chunk of equity standing to his credit without a share vesting schedule.

Then you have a more serious legal shege coming your way.

Share vesting serves two primary purposes.

1. As an incentive mechanism to make the founders stay with the company for the long term.

2. As a protective mechanism in case a founder leaves the company.

If shares are not vested over a period of time and a Co-founder say, your CTO leaves, one of the ugly incidents that you will have to deal with is a case of Monkey dey work, bamboo dey chop.

This is because the founder who is leaving or has left will always have a claim on any gains or profits your company makes in the future to the value of their equity.

Besides, having a claim on the company's finances, they can still exercise their voting rights in the company though they are no longer with the company.

Dear business Owner ...

It is not enough to register a Ltd liability company with a couple of your friends.

If your goal is to build a scalable business, then you don't just need any lawyer, you need a lawyer that understands the dynamics of a start-up business.

And this is what we do very well at Barinaada Legal.

Send a reply to this email now if you need our help.

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