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LSDefine
Simple English definitions for legal terms
founder's share
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A quick definition of founder's share:
A founder's share is a type of share given to the person who started a company in England. It is not very common anymore, but it is given as part of the payment for the business. A founder's share only gets a share of the profits if the regular shares have already received a certain amount of money.
A more thorough explanation:
A founder's share is a type of share that is issued to the founder of a company as a part of the consideration for the business. In England, this type of share is now rare.
A founder's share only participates in profits if the dividend on ordinary shares has been paid to a specified amount. This means that the founder's share will only receive a portion of the profits after the ordinary shares have received a certain amount of dividends.
For example, if a company has issued both ordinary shares and founder's shares, and the dividend on ordinary shares has been paid to a specified amount, then the founder's share will start to receive a portion of the profits. However, if the dividend on ordinary shares has not been paid to the specified amount, then the founder's share will not receive any profits.
Overall, founder's shares are a way for the founder of a company to have a stake in the business and to potentially receive profits, but only after other shareholders have received a certain amount of dividends.