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Legal documents and agreements

A collection of terminology relating to a company's legally binding documents and agreements.

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Written by Collier Kirkland
Updated this week

📌 Educational Resource Disclaimer

This glossary provides general explanations of common equity terms. These definitions and examples are for educational purposes only and do not constitute legal, financial, or tax advice.

Equity structures vary significantly between companies, and your specific situation may have unique terms and conditions. For guidance on how these concepts apply to your individual situation, please consult with a qualified legal, financial, or tax professional.

Board Resolution

Official minutes from board of directors meetings that approve major corporate actions. Required for option grants, stock issuances, and other significant decisions.

Common resolutions:

  • Approval of equity incentive plan

  • Approval of option grants

  • Approval of stock issuances to investors

  • Approval of officer appointments

Why it matters: Board resolutions are legal proof that actions were properly authorized. Always required for equity issuances.

Bylaws

Internal rules governing how the corporation operates; board meetings, officer roles, shareholder meetings, etc.

What they cover:

  • Board size and election procedures

  • Officer titles and duties

  • Meeting requirements and quorum

  • Voting procedures

  • Amendment process

Why it matters: Bylaws are less visible than the charter but equally important for governance. They determine how decisions are made and who has authority.

Certificate of Incorporation (Charter)

The founding legal document of the corporation filed with the state. Defines authorized shares, share classes, and basic corporate structure.

What it includes:

  • Company name

  • Authorized shares (number and classes)

  • Preferred stock rights (if any)

  • Par value

  • Registered agent

Amendments: Changes require board and shareholder approval. Common amendments:

  • Increasing authorized shares

  • Creating new share classes

  • Changing company name

Amended & Restated COI:

Rewrites the entire charter, incorporating all previous amendments into a single, comprehensive document, completely replaces original COI and all prior amendments. Usually occurs:

  • After a priced round

  • Multiple amendments filed over time

  • There are several simultaneous changes

Why it matters: Your certificate limits how many shares you can issue. 409As need the most recent Amended & Restated COI (not Amendments) to correctly reflect investors’ rights and preferences.

Shareholders Agreement

A contract between shareholders (often founders) that governs their rights and obligations regarding their shares.

Common provisions:

  • Transfer restrictions: Can’t sell shares without approval

  • Right of first refusal (ROFR): Company gets first chance to buy

  • Co-sale rights (tag-along): Other shareholders can join in sales

  • Drag-along rights: Majority can force minority to join in sale

  • Voting agreements: How to vote on certain matters

  • Board seats: Who gets to appoint directors

Example provision: “Founder A cannot sell shares without first offering them to the company at the same price. If company declines, Founder B has the right to purchase up to their pro-rata share.”

Why it matters: Shareholders agreements prevent founders from walking away with equity or selling to random people. They protect all shareholders’ interests.

Stock Option Agreement/SOA (Option Grant Agreement)

The contract between company and option holder specifying the terms of the stock option grant.

What it includes:

  • Number of options granted

  • Strike price

  • Vesting schedule

  • Exercise terms

  • Post-termination exercise window

  • ISO vs. NSO designation

  • Expiration date

Why it matters: This is your legal proof of a company's option grant.

Stock Purchase Agreement (SPA)

The legal contract between the company and investors documenting the purchase of shares in a priced round.

What it includes:

  • Number of shares purchased

  • Price per share

  • Representations and warranties (company is legitimate, properly formed, etc.)

  • Conditions to closing

  • Investor rights

Why it matters: The SPA is the primary legal document for equity investments. It’s signed by both company and investors at closing.

Vesting Agreement (Restricted Stock Purchase Agreement)

The contract that implements vesting for shares (RSAs), including the company’s repurchase rights for unvested shares.

What it includes:

  • Number of shares purchased

  • Purchase price (usually par value)

  • Vesting schedule

  • Company’s repurchase rights

  • Acceleration provisions

  • Transfer restrictions

Why it matters: This is how founder reverse vesting is implemented. It’s legally binding and enforceable.

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