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I am about to register an online technology company in a country where I am not a citizen or permanent resident (PR). Law requires me to appoint a local citizen or a PR as a company "director" in order to be able to register company in that country.

I wonder what do you think how much shares should I offer to this "founding director" considering I don't expect him/her to take any active role in the company (at least for now) and their role is purely to comply with the legislation in order to be able to register a company.

It's a bootstrapped start-up and I can't offer any salary especially since this "role" is only admin and not an active business role.

Thanks

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0 shares - pay them hourly or some fixed fee for their efforts.

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Really? Well that sounds a brit drastic. What if I believe this person has a lot of potential and good skill set for the future? Lawyer, MBA educated business development person etc.? If I offer some small shared they might get interested to be involved with business actively as well as part-timers? – Peter K. Oct 10 '11 at 15:01
I don't think so. If they don't have a set list of job duties and responsibilities that need to be done regularly for the business to succeed then they aren't 'earning' any equity. Just pay them for their time. If they specifically want equity in lieu of payment then you should come to some expectation to how much they plan to work in return for that equity. Never give away equity. It is earned or bought. Otherwise in 6 months you'll post 'My business parter who is 25% owner doesn't do anything... what should I do' :] Lots of those types of posts on here. – Ryan Doom Oct 10 '11 at 18:08
Thanks I see your points and agree with you. You see my problem is if I pay them, it might not be that attractive for them go through all the fuss... the people I have in mind don't have a financial need and I don't have thousands of $ to pay for this. I was thinking something like 2.5% vested over 2 years period. Keep in mind that if the "director" leaves I need to find a replacement to keep the business afloat. I don't expect much revenue in first few month-year so I don't have much cash-flow flexibility either. – Peter K. Oct 11 '11 at 1:53
Yeah I can see your angle too, if you don't have $ then equity is a good thing to use. Very typical in start-ups :] - as long as there is some agreement to do some work. But, 2.5% may be ok for this person to do some paperwork and take care of some initial things. – Ryan Doom Oct 12 '11 at 22:14
Thanks Ryan, actually I like your recommendation about offering just fixed monetary compensation. What I try to do I think is to use combination. Maybe I offer something like 1% and a fixed price. Anyway I agree, equity should only be offered to individual taking active role in the business. – Peter K. Oct 14 '11 at 2:25

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