Go back
What happens if founder stock was issued without board approval?
Incorporation & entity structure
The issuance may be defective, which puts the founder's ownership in question. Delaware has a ratification procedure to fix it, but it costs legal time.
It is usually discovered during diligence, when counsel asks for the consent and nobody can find one. Cleaning it up mid-round delays the round.
We handle this for founders running US companies.
