Startups Stack Exchange Archive

How to be protected from liabilities and debt when taking equity?

• posted by: raphadko on 2017-10-10
• tagged: legal, equity
• score: 1

My boss offered me 5% of our vert early stage company. I am inclined to take it but, since I’m not going to be fully present and I won’t participate in the business decisions, I do not want to risk getting into debt if the company does. Also, I don’t plan to hire an expensive lawyer to do the paperwork. Is it safe? Could you guys give me some tips to ensure I won’t get into trouble?

The startup is incorporated in California. The offer was: “5% equity vested 4 years with 1 year cliff”

Answer 13461

• posted by: Denis de Bernardy on 2017-10-10
• score: 3

Confirm that the startup is a limited liability company. You can usually tell whether it is based on the suffix in its registered name. Depending on the country, it’ll be things like LLC, Ltd, GmbH, Sarl, SA, etc. Just ask if you’re not sure. If the startup is a limited liability company, it’s safe.

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