Shareholder Agreements, Equity Plans, and Secondary Sales

Company shareholder holding ownership documents in an office

At a growing company, equity is compensation, currency, and control. The documents governing ownership affect who can vote, who can sell, what happens when someone leaves, and how value is divided in a financing or exit.

Sutter Law advises companies, boards, founders, executives, and shareholders on shareholder agreements, equity incentive plans, secondary transactions, governance, and stock-related tax planning.

Business owner presenting shareholder agreement terms to co-owners

Shareholder and Buy-Sell Agreements

Shareholder agreements establish the rules that apply when ownership changes or owners disagree. We draft and negotiate voting arrangements, board rights, transfer restrictions, rights of first refusal, co-sale rights, drag-along provisions, buy-sell mechanisms, and deadlock procedures.

For closely held companies, the agreement should also address death, disability, termination, voluntary departure, valuation, and funding of repurchase obligations.

Equity Incentive Plans and Executive Grants

Equity plans allow companies to compensate employees, executives, directors, and advisors while preserving a consistent approval and documentation process. We establish and update stock option and other equity plans, share reserves, grant forms, vesting terms, and board approvals.

For senior executives, we also negotiate acceleration, change-of-control treatment, exercise periods, repurchase rights, and equity terms connected to employment or separation.

Employee reviewing a stock option grant on a computer

Stock market charts on screens representing a secondary share sale

Secondary Sales and Tender Offers

Private-company shareholders increasingly seek liquidity before an IPO or acquisition. Secondary transactions can range from a single founder or employee sale to a company-organized tender offer involving many holders.

We help companies manage transfer restrictions, rights of first refusal, board approvals, securities-law considerations, buyer documentation, information rights, and cap-table updates so liquidity does not create governance or diligence problems.

Tax Planning for Stock: 83(b), QSBS, and Section 1045

Equity decisions can have significant tax consequences. We work with clients and their tax advisors on the legal aspects of restricted stock and 83(b) elections, potential Qualified Small Business Stock treatment under Section 1202, and Section 1045 rollover planning.

Tax eligibility is fact-specific, so planning is most useful before an issuance, transfer, financing, or sale changes the facts.

Tax forms and a calculator for stock and QSBS tax planning

Corporate Governance and Investor Rights

As companies add investor classes, governance becomes more complex. We help interpret and document voting rights, protective provisions, board composition, information rights, transfer restrictions, and approval requirements across common and preferred holders.

Shareholder and Equity Disputes

When ownership rights are disputed, the governing documents and corporate records usually determine the available leverage. We work with our dispute practice on vesting, repurchase, dilution, information-rights, deadlock, and control disputes, including negotiated buyouts and separations.

Why Companies Choose Sutter Law

Experienced Business Counsel

Our attorneys work on the corporate, financing, commercial, and transaction issues that arise as private companies grow, allowing related issues to be handled in a coordinated way.

Direct Attorney Involvement

Clients work directly with the attorneys responsible for the matter. The team is structured to keep senior lawyers involved rather than passing routine responsibility through multiple layers.

Bay Area and California Focus

We serve companies, founders, investors, and owners throughout the Bay Area and California, while regularly handling matters involving Delaware entities, national counterparties, and international operations.

Practical, Transaction-Oriented Advice

We focus on the legal issues that affect economics, control, timing, and execution, and coordinate with tax, accounting, financial, and other advisors when a matter crosses disciplines. Companies that want ongoing support can also work with us as outside general counsel.

Frequently Asked Questions

What is a tender offer?

A tender offer is a structured offer to purchase shares from holders, often organized by the company or an investor. Private-company programs require careful attention to securities rules, disclosures, transfer restrictions, and approvals.

Can employees sell private-company shares before an IPO?

Sometimes. Sales may be limited by company transfer restrictions, rights of first refusal, securities laws, contractual restrictions, and board approval requirements.

What is QSBS?

Qualified Small Business Stock is stock that may qualify for favorable federal tax treatment under Internal Revenue Code Section 1202 if statutory requirements are satisfied. Eligibility is highly fact-specific.

What should a buy-sell agreement cover?

Common terms include triggering events, valuation, payment mechanics, funding, transfer restrictions, rights on death or disability, and what happens when an owner leaves the business.

Can vesting accelerate in an acquisition?

It can if the applicable equity documents provide for acceleration or the parties negotiate it. Single-trigger and double-trigger acceleration provisions operate differently and should be reviewed alongside the acquisition and employment terms.

Shareholder Agreements & Equity Legal Resources from the Sutter Law Blog

Our attorneys publish practical guidance on corporate, financing, transaction, employment, privacy, intellectual property, and business-law issues. Recommended reading:

Ready to Talk?

Planning a secondary, tender offer, or equity plan update? Schedule a consultation or call 415-341-2888.

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