Q: Employee offered equity for deferred payment. Company closed, new one opened. Can equity be granted?
Employee worked for startup and offered equity in exchange for deferred payment. Company was so slow, that employee and CEO agreed to pause working relationship. CEO now has very similar company, but under a new name, says cannot offer equity to someone who is not an employee. What should employee do? Can equity in new company be granted to employee to fulfill previous promise? Does employee need to work for the new company? The new company does do the exact same thing as previous company, just a different name.
A: You will need to contact a lawyer directly for a review of the total circumstances. There are simply too many variables to make an even partial general statement of the law. The key issues are whether the equity rights were fully vested and exercised before the company closed. Even then, the answer would change if the new company purchased the assets or actually conducted a merger with the defunct company.
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