I am 18 but my co-founder is 17. (In other words, I am able to sign a binding contract, he is not.) We are getting ready to incorporate our startup — but is my co-founder old enough to start, and own part of, a company? He turns 18 in December, which is too late for us. One solution I thought of was for me to take care of his shares until he turns 18, at which point I sign them over to him. Is this necessary, or can we incorporate and each own our own shares from the start?
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The answer to your question depends on which state's law will govern the agreement. For example, in California (where I practice) there are quite a few laws that bear on the issue of a minor entering into an agreement (please see Contracts with Minors can Lead to Major Problems). The principal risk for an adult who enters into an agreement with an unemancipated minor is that the minor may be able to walk away with impunity, whereas the adult will not have that freedom. Disclaimer: This information does not constitute legal advice and does not establish an attorney-client relationship. |
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