Founders' shares

Founders' shares are shares held (or originally held) by the founders of a company. They may be golden shares, deferred shares, have other characteristics that distinguish them from ordinary shares. In some contexts founders' shares may simply mean ordinary shares held by the founders.

The spelling varies with a possessive apostrophe sometimes used and sometimes omitted.

The issue of golden shares or shares with extra voting rights (i.e. more than one vote per share) is no longer a common practice as it is disliked by other shareholders — the objection is similar to that to non-voting shares.

The use of golden shares is still common where companies need to reconcile another specific objective (maintainning certain values or making a particular contribution to society) with making a profit — however this is still a rarity compared to the number of companies that simply issue only ordinary shares.

Start-ups sometimes issue founders' shares that may be repurchased by the company if the founder fails to remain actively involved in the company for a specific time. In some cases the number of shares the founder may retain is proportionate to their period working for the company. This is done when founders are not just providers of capital, but people whose skills are needed by the start-up. Deferred shares (with appropriate characteristics) are an obvious alternative.

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