Story Vlog · 1:03 ·
Is your startup’s stock actually issued? Check the 3Cs
A security only exists when three things happen: consent, a contract signed by both sides, and consideration actually paid. Here is the 3Cs check founders can run on every issuance.
Transcript
The single most common mistake we see founders make is in assuming they have a security issued when they forgot the board consent.
So, here’s a quick overview of our “3Cs” framework: not legal advice, not perfect for every transaction, but a common, standard guide a startup founder can use to make sure they don’t make a silly mistake. Your 3 Cs are consent, contracts, and consideration.
First, the board must consent. For some transactions, the stockholders must consent, too.
Second, the contract: you actually need both sides to sign a purchase or grant agreement effecting the sale.
Third, consideration: this could be cash or a transfer of other value, but if the securities are not paid for, they don’t exist.
Use our 3Cs framework to keep yourself from making silly founder legal mistakes, and visit captable.law for more tips, or, when you find you have more money than time, have us run this logic for you.
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