[gsylvie]

If you don't like the terms of the shareholders agreement, then you don't have to buy the (private equity) shares. But if you buy the shares and sign the agreement, I don't see why the directors should honour illegitimate share transfers you attempt to make in the future.

[conanbatt]

So if you signed a terms of service of Apple that said all your assets are actually Apple's, you would happily comply?

[Pyxl101]

All contracts have consideration. If the consideration for the agreement that all my assets are Apple's is $1 billion USD, then sure I would happily comply, rather than risk voiding my contract.

More seriously: people should comply with the agreements that they sign. Don't sign an agreement that says all of your assets are actually Apple's if you're not happy with it. Read all of the fine print and don't be surprised later.

Don't buy stock in a privacy company if you're not happy with the constraints on it. One of the common key differences between private and public companies is that you can't sell or transfer stock in private companies without their approval. You know that when buying it initially, or when agreeing to receive it as compensation.

There are legitimate reasons why private companies don't want their stock to be transferred willy-nilly. For one, it makes the cap table larger and more complex, which complicates further funding or purchase agreements. Two, if the cap table grows too large, then the company may become subject to onerous SEC regulations that are more appropriate for public companies (but without receiving the corresponding benefits). Three, since shareholders are entitled to certain information about the company, private companies limit ownership so that they're not obligated to share this information with people they do not trust. There are probably more reasons.

[conanbatt]

> More seriously: people should comply with the agreements that they sign. Don't sign an agreement that says all of your assets are actually Apple's if you're not happy with it. Read all of the fine print and don't be surprised later.

You have read every single word of all the TOS you ever signed? I find that very hard to believe.

> Don't buy stock in a privacy company if you're not happy with the constraints on it. One of the common key differences between private and public companies is that you can't sell or transfer stock in private companies without their approval. You know that when buying it initially, or when agreeing to receive it as compensation.

If we talk about the letter of the law, then you don't need to sell the stock, you can sell futures of it at your own compliance. The company can't prevent you from doing that by letter of the law. But the SEC can. The contract is only enforcible in practical terms because as an employee or investor you are disallowed from making any legal claim about the stocks you are entitled to.

Also, the argument that it is 'legal' is entirely a different thing. I never mentioned legality, I said ridiculous. Its not a moral, economic or practical argument to say that something is 'legal'. Saying something is legal is one of the lowest forms of defense for an action. Its saying that the only purpose of it is that they cant put you to jail for doing it.

> There are legitimate reasons why private companies don't want their stock to be transferred willy-nilly. For one, it makes the cap table larger and more complex, which complicates further funding or purchase agreements. Two, if the cap table grows too large, then the company may become subject to onerous SEC regulations that are more appropriate for public companies (but without receiving the corresponding benefits). Three, since shareholders are entitled to certain information about the company, private companies limit ownership so that they're not obligated to share this information with people they do not trust. There are probably more reasons.

Very nice, but there is a much more important reason why companies want to not be able to sell off shares: they benefit economically directly because of it. Because the owners get the shares back when people dont buy them, and they have information asymmetry with the employees. AS an employee you have a lot less information.

If employees could sell their stocks willy nilly, every employee that leaves a startup and doesnt want to buy stock to keep would sell them in the open market, which would dilute the value of companies big time while making employees richer.

Hm.

[mikestew]

Why would you sign it if you didn't intend to "happily comply"? Do you often walk into contract negotiations with little intention of holding up your end of the deal?

[conanbatt]

I have never read any terms of service ever, nor I am a lawyer to understand the ramifications of it. Do you have a lawyer on retainer to read all the TOS you ever signed?

[JumpCrisscross]

> Do you have a lawyer on retainer to read all the TOS you ever signed?

No. But I do before signing a shareholders’ agreement.

[DenisM]

Your hypothetical deal with Apple will get thrown out of court for two reasons:

- It's lop-sided, as in they get something for nothing, comparatively speaking. Courts don't see such contracts to be valid.

- It's understood that users mostly don't read ToS, and instead rely on their general understanding of what ToS may contain, plus or minus some deviation. Anything that's way outside reasonable deviations fails the "meeting of the minds" test, and is also held invalid.

The shareholder agreement is a different matter. The investor most certainly is expected to read the agreement, and they do. And both parties are exchanging plausibly valuable things - stock for money.

I'm not a lawyer, this is not a legal advice. Seek professional advice before taking any action based on what you read.

[mikestew]

Do you have a lawyer on retainer to read all the TOS you ever signed?

A click-through TOS? No, duh; you knew that when you asked it. But a shareholder's agreement that I put pen to paper for my signature, which is the topic at hand? Umm, the answer to that one would be "yes".