How Can We Add a Co-founder to Our Corporation?
This post is based on a question that I answered recently on Avvo. The question and answer – which pertain to adding a new co-founder to an existing corporation – are paraphrased below.
Q. I would like to add a third co-founder to an existing corporation. Does the Founder Agreement need to be changed? How can I make a co-founder designation?
A. The term “co-founder” has little or no significance in this context.
What you apparently want to do is to associate with the corporation a third individual who will have rights equal to those of the two individual already so associated. This means, in all likelihood, that, at the least, you will need to:
- Amend the Founder Agreement
- Have the board of directors approve resolutions authorizing the issuance of shares (which might require amending the Articles of Incorporation) and, perhaps, appointing the third individual as an officer
- Have the third individual appointed or elected as a director by the board or the shareholders, as applicable (which may require that the bylaws be amended) and document such action appropriately
- Issue a share certificate and update the share transfer ledger
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.