Documents & Terms

This section helps answer common questions from founders incorporated with the standard set of Stack documents.

📄 Documents

What documents are included in the incorporation set?

Our incorporation set includes a Certificate of Incorporation, Initial Board Consent, Action of Incorporator, Bylaws, Initial SAFE Consent, and Indemnification Agreement, Technology Assignment, and Stock Purchase Agreement for each founder.

For a full breakdown of what each of these documents is for, check out the Incorporation Terms page.

What does each document mean?

Certificate of Incorporation (COI)

This is the primary document that confirms your company's formation. It authorizes the stock issuable by the company, lists the company directors, the registered agent address, determines what matters stockholders can vote on, and more.

Bylaws

These are a set of rules and procedures for the internal functioning of an organization. They are like an operating manual that governs the day-to-day working of a company.

Bylaws typically regulate the rules and procedures of director elections, board and stockholder meetings, officer appointments and their roles and responsibilities, and similar matters.

Board Consent

This refers to the approval of a startup’s board of directors. Companies act through their board of directors and require their consent in writing. The initial board consent can contain various approvals, but often include the following at the least the election of officers, determination of the fiscal year for the company, authorization for the officers to open a bank account, and ratification of the COI and other documents.

Action of Incorporator

This document is executed by the incorporator (generally one of the founders). It appoints the company's initial Board of Directors, authorizes the bylaws, and resigns the incorporator from any further responsibilities.

Indemnification Agreement

This protects the Board Directors (including the founders) against liabilities, losses, and lawsuits that may result from serving on the board of the company.

In this agreement, the company agrees to indemnify the directors and hold them harmless from any liabilities that may result from the business being sued or being held responsible for a major loss.

Technology Assignment Agreement

This agreement is mostly relevant to tech-backed startups where the founder signs to transfer intellectual property related to the company's business created by the founder before incorporating the company itself.

The document defines the elements that will form the company's "Intellectual Property," including but not limited to technology, inventions, know-how, information, copyright/ trademark rights, etc. The agreement then assigns all this intellectual property to the company at the time of incorporation itself.

Stock Purchase Agreement

This agreement allows founders to document their initial ownership of the company by establishing the purchase of common stock from the company.

The agreement includes, among other provisions, any vesting terms for the stock, standard transfer restrictions, any vesting acceleration terms, the company's Right of First Refusal on the stock, and a Lock-Up Provision (Market Standoff Provision).

Where can I find my COI, EIN, or other documents in the Stack set?

You can find most of the documents on your Stack dashboard. All documents were also attached to your "Welcome to AngelList Stack" email in a zipped file.

Who wrote the incorporation documents?

Our incorporation documents were created with Goodwin Proctor. They are specifically written with founder-friendly terms to set venture-backable startups up for future success.

🪙 Shares and Share Classes

How many shares are created at incorporation?

Our documentation supports authorizing 15M shares in total at the time of incorporation: 14M shares of Common Stock and 1M shares of Founders Preferred Stock.

The SPA documents are for 10M shares, but there are 15M authorized shares in the Board Consent. What is the difference between them?

There are two types of shares being referenced: authorized shares and issued shares.

Authorized shares are shares that have been created and approved by the Board of Directors. At the time of incorporation, Stack companies have the Board (made up of any founders) authorize the creation of 15M shares.

Issued shares are shares that are currently in use. Of the 15M authorized shares in the Stack incorporation documents, only 10M shares (9M common shares and 1M Founders Preferred shares) are issued. These 10M shares are issued directly to the founders, which they buy through their Stock Purchase Agreement.

The 5M remaining shares are authorized but unissued. They are set aside for future use—to create an employee stock pool, issue advisory shares, and more.

What is Founders Preferred stock? How does it compare to Common or Preferred stock?

Founders Preferred gives founders the right to convert a portion of their stock into a future series of preferred stock to sell to future investors. Founders can sell Founders Preferred stock at the preferred stock price instead of the common stock price.

Do I need to set up the Founders Preferred at the time of incorporation or can it be done later?

The Founders Preferred structure should ideally be put in place at the time of company formation. Although it can be done, there can be potential income tax implications for not doing it immediately upon incorporation.

Other things to keep in mind:

• Most VCs are OK with this structure if the founders' preferred stock is kept to no more than 20% of a founder's holdings.

• Founders' liquidity happens in connection with a future financing event. It is usually in connection with a future VC or strategic financing where the investor is also buying preferred stock from the company.

• The Founders Preferred has the same voting rights as the founders' common stock, and it is junior to the preferred stock purchased by investors.

How should I fill out the Stock Power and Assignment section?

In Section III of the SPA, there is a Stock Power and Assignment Section. If you are signing through DocuSign or on the Stack platform, you may notice that you are only filling out specific sections of this page while signing the SPA. The remaining sections will be filled out if or when you make use of the document and transfer stock back to the company.

🔨 Making Changes

Can I add or remove a co-founder post-incorporation?

Having a co-founder join post-incorporation requires legal help, since the new co-founder needs to be added to company documents, sign an SPA, and more. Similarly, removing a co-founder may also require legal help. Adding or removing a shareholder on the Stack dashboard does not constitute the legal addition or removal of a co-founder.

The Stack team can only help with initial incorporation. Any changes to the terms or team after incorporation must go through your legal counsel.

After incorporation, can I change the number of shares issued to each co-founder?

Stack creates a set of incorporation documents for founders based on the information from the application. After incorporation, Stack can't make changes to those documents.

If you need to change any terms of the after incorporation—the number of shares issued, vesting schedule, etc.—we recommend reaching out to external counsel. With your external counsel, you can edit the SPA to reflect the terms that you need.

Once the underlying documents have been edited, you can make the adjustment in Stack. Please note that the founder share certificates in Stack are for representational purposes only. Editing details of shares in Stack is not the same as editing the underlying legal document.

I'm working with external counsel. Where can I find an editable SPA?

In your welcome email from AngelList Stack, you should have received a zipped file called "Final Documents." Within the file, there is a folder called "Founder Docs." There is a Word version of an SPA for each co-founder.

Does AngelList have a set of recommended lawyers to work with to make changes?

Yes, we do! Here's a list of lawyers we recommend.

Can I change the four-year vesting schedule referenced in my SPA?

Changing the vesting schedule written in the SPA is possible, but it will require legal help and is not recommended.

We've structured our articles of incorporation to support venture backable companies.

Traditional venture capital funds generally require founders to have four-year vesting with a one-year cliff. If your company has a different vesting schedule, it is less likely to receive venture backing.

To change the vesting schedule in your SPA, you'll need to work with a lawyer to re-write and sign an edited SPA. Stack provides the SPA template, but we can't make edits to that template.

Once the edits have been made, you can edit your share certificates to reflect the new vesting schedule.