Encyclopedia / Founder Shares

Founder Shares are shares owned by a Founder Member, entitling them to participate in governance. Normally, only one Founder Share is issued to each person involved in the formation of the company.

Founder Shares are intended to protect the organisation against “mission drift” without giving founders the power to determine strategic plans and/or the operational policies of the company. As the founders (or any other shareholder group) can convert ordinary resolutions into special resolutions, any can veto changes that would violate their original intentions for the business. In the case of ordinary resolutions, Founder Shareholders vote (if applicable) using their Labour, User and/or Investor shares. Founder shareholders elect two or three directors once a member threshold has been reached (dependent on which variant is adopted).