[mynewwork]

Dumb question: what is the status of the un-owned (un-vested) portion of shares in the first years?

Suppose two people, A and B, are equal partners each vesting towards 50% ownership in 3 years. After the first year, they both have vested ownership of 16.6%, what is the status of the other 66% of the company? Does the corporation as an entity own 66% of itself? Do they both really own 50% of the company, with an agreement that new shares will be created in a year and distributed to them? It seems to me like this scenario would mean they both own 50% of shares outstanding, and each year new shares are created which dilute their original holding's equity, but the shares then go to them (so they initially hold ie 10,000 shares of 20,000, then later hold 20,000 of 40,000).

[gamblor956]

Corporate ownership is determined by shares outstanding. Reserve shares retained by the company do not figure into ownership calculations.

A company cannot directly own itself, but it can indirectly, if it contributes some of its shares to another company that it wholly or partially owns. (This is not permissible in all jurisdictions, such as the U.K.)

[wooster]

This isn't how vesting works for founders.

Typically, in US startups, the stock is sold to the founders up front, with the company having a repurchase option corresponding to the vesting period.

[dsplatonov]

this is a good question. basically the total amount of shares are reserved for you (in the example - 50%)-no new shares are issued. in the article I provided our(Staply) vesting procedure-if I or my partner leaves the company, he gets a certain percentage of the total amount of shares in accordance with Vesting, other shares destroyed, so the stake of each remaining shareholder increases proportionally to the amount of destroyed shares. in the article you can find example of the statements. however, vesting is quite flexible procedure and you can easily put the procedure, described in your comment