Or let us say that you want to issue additional shares to a founder. In both the above situations, this method would help you learn how to add a founder after the company has been created and how to issue additional shares to both a new founder or an old one. SITUATION 1 – AddingRead More
Issuing additional shares
Or let us say that you want to issue additional shares to a founder.
In both the above situations, this method would help you learn how to add a founder after the company has been created and how to issue additional shares to both a new founder or an old one.
SITUATION 1 – Adding a new founder and issuing founder shares to them
Step 1: From the main dashboard, click on “Shareholder” from the column on the left-hand side of the page. You would then be directed to the following page where you get the option to “Add a Shareholder”. Click on it to add a founder to the company.
Step 2: By clicking on “Add Shareholder”, a form appears at the top of the list of shareholders as shown below:
You get the option to choose if the shareholder you are adding is an individual or a company. In this case, we left the option of “Individual” which comes up manually as soon as you click on “Add Shareholder”.
Now, fill in the details like the first name, last name, and the person’s designation. As soon as you have filled in the details, click on “Save”. With this, the shareholder profile will be created.
Note: You can add more than one shareholder at the same time by clicking on the “plus sign (+)”. If you want to cancel the process, you can click on the “cancel” button at the top right-hand side.
Step 3: Since you have now added the shareholder details in the cap table, we can move to begin the process of issuing shares to them. To do this, click on “Securities” and then on “Equities”. This would take you to the following page:
You will see that there is already an equity class of “Founders” here. This means that you do not have to create a new equity class.
Note: If you decide to create an equity class, you can do so by clicking on “Create new class”. But the class is created as you issue shares to the shareholder.
To begin the issuance process, you need to click on the “Issue Grants” on the top right-hand corner.
Step 4: You will be redirected to the next page where you need to now select the equity class again from the list available as shown below.
You will only be able to see all the available equity classes and also have the option to create a new one. But since we are issuing shares to another founder, we will select the “Founder” equity class here.
Step 5: Once you do this, a button would appear that says, “Add New Grant” Click on this.
Step 6: Once you click on this, you will be taken to the next page where you can now begin the process of issuing shares to the founder.
Here you will have to type in the shareholder’s name in the field available. This would help you select the shareholder profile and then issue the shares to this person. Since we have already added the shareholder profile, you can use this option.
Note: In case you did not add the shareholder profile, you can select the option of “Add new shareholder” and then add the details of the shareholder as you issue the shares to them.
Step 7: After you type in the name of the shareholder in the field, their name would appear on the side with a button that says, “Select” as shown below.
Click on “Select”.
Step 8: Once you do this, a new panel will appear where you can now add in the share issuance details.
Add in the details of the share issuance including the number of shares, the price of the shares, the date of issuance, and the share certificate name. You also need to select if there is a vesting schedule for the issuance. In this case, we selected “No” as there is no vesting schedule.
Note: You can add more grants (share issuances) right on this page by clicking on “Add new grant”. Note that the issuance can only be done from the “Founder” equity class. So if you are adding two founders to your company, you can also add the second founder’s details by clicking on “Add New Grant” and then add the details just like you did in the last steps.
Once done, click on “Submit”. And with this, the founder is added to the company and the shares are issued to them.
Step 9: You will be redirected to the page where you can now see all the issuances under the Founders equity class.
You can see the details of the person we just issued the shares to. If you want to see the details about the issuance, click on the shareholder’s name. In this case, click on “Kevin Davis”.
Step 10: This would take you to the page where you can see the details of the share issuance.
And just like this, you can easily issue additional shares to a new founder from the founder equity class.
SITUATION 2 – Issuing shares to a founder who is already in the company
Now let us say that the founder of the company wants to add capital in exchange for equity. In this case, the founder would need to have shares issued to them from another equity class like Series A or Series B, depending on the round of funding that the company is undergoing. For this example, we will use Series A. Assuming this, let us see the steps to issue additional shares to a founder.
Step 11: Click on “Dashboard” on the left-side panel and then on “Class Ownership” as shown below.
Click on “Detail Overview”, a new window with ownership overview chart will open as shown below:
Click on “Issue” then “from Equity class”.
Step 12: Once you have done this, you will be directed to the following page.
Here, you need to select the Equity Name. Now, since the company was just created, and there isn’t any Series A equity class made, we will have to create it. For this, you will click on “Create New Security” here.
Note: Remember that the founders are also shareholders. In fact, they are the first shareholders of any company.
Step 13: Once you do this, you will be redirected to the page where you can create the equity class.
You will first select the equity type, which is the kind of shares that the equity class would hold. In this case, we selected “common”. After you select the share type, the next field appears. Here, you need to add the class name “Series A”. As soon as you have done these two steps, click on “Submit”.
Step 14: This will again take you to the step where you need to select the equity class. In this case, select the one you just created.
Step 15: With this, you will reach the following page.
Here, you will need to search for the shareholder’s name like you did in the last situation as well in this step. Type the name in the “Select Shareholder” field. And the name of the founder who you want to issue the shares to would appear on the right side with a button that says, “Select”. Click on “Select”.
Step 16: By doing this, a new panel will appear and you can add in the details of the issuance.
Once you have added in the details including the number of shares, price per share, date of issuance, share name and if there is a vesting schedule or not, click on “Submit”.
Note: If you have selected the wrong founder, you can click on “remove” from the top right-hand side corner. And then search for the right founder to come to this step.
Step 17: You will then be directed to the following page where you can see all the details of the equity class – Series A.
You can see the grant details of the shares issued to the founder here as well.
Step 18: To view all the shares owned by “Kevin Davis” (the founder) in the company, you will have to view the details of the cap table. For this, click on “Cap table” on the left-side panel of the dashboard and the “Detail” from the drop-down menu to reach the following page:
From the above, you can see how much “Kevin Davis” owns in the company along with the share class and the number of shares that he owns from each class.