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Very good question. From a legal perspective, under most US jurisdictions whenever a director, officer or a controlling shareholder is on both sides of a transaction, the "duty of loyalty" such person owes to the company is implicated. In such cases, other shareholders can challenge and reverse any transactions unless: i) all material details of the ...

It's great that you want to start your own company. You can't do this while running another company for someone else unless you get an agreement in writing that your current employer is completely comfortable and waives any interest. My recommendation is to have a candid conversation and work out a mutually acceptable departure date and then go full speed ...

I am curious to hear why do you think this would be unethical? Based on what you described unless you have an agreement with the University that you will not hire their former students there is no ethical challenge from what I can see. The student is seeking employment. You have a position to fill, so shake hands get the monetary and benefits agreements ...

The essential steps are (1) disclose all material facts, including your involvement, to the appropriate people in both companies, then (2) have those appropriate people provide their consent in writing before the transaction proceeds. This issue is discussed in a similar context - a transaction between a corporation and one of its directors - in Can a ...

It sounds like your partner is trying to quickly get a minimum viable product (MVP) for business reasons while you are driven by other non-business goals. Further it would seem that perhaps he is better at business (at least in negotiating with you he ended up with more stock than you did) while you are better at programming. You both have skills which ...

Here is now I view your options; Go adhead being a director of the new company despite it being in breach of your contract Your employer will probably never know. Just make sure you don't draw attention to it and you should be fine. This is the course of action I would take but I don't really want to recommend it to anyone else as you put yourself at a ...

I read each of these scenarios and said "Fantastic -- what a great way to pull yourself up by your own relationships." I am not a lawyer -- so this is not a legal dissertation on conflict-of-interest. this is based on years of experience of paying lawyers a lot of money. This is the distillation I have come out with: Of course there are ...

Take a look of those 2 posts: From Brad Feld http://www.feld.com/wp/archives/2005/07/term-sheet-founders-activities.html “Founders Activities: Each of the Founders shall devote 100% of his professional time to the Company. Any other professional activities will require the approval of the Board of Directors.” Venture hacks in this post talk about it ...

You may wish to consider forming a joint-venture for the work, it will state out implicitly what work is to be done, how, and by whom. It is treated as a separate legal entity for the issues of transactions. Talk to a lawyer about it and the topic of your position in both companies. Otherwise, you had better hope everyone likes each other ALOT, if not you ...

Its not just the partners. Depending on your stake of ownership in both (and others, if there are additional shared owners), they may be considered related before the law (especially tax law), making the transactions between them problematic. adding details: In the United States, the Federal law identifies these situations, commonly called as "controlled ...

So the first point to make is that it's a matter of fact and of record that you are a co-founder of both Startup 1 and Startup 2. Given that both ventures seem to be making good progress, that makes your resumé a positive value to each startup. Secondly, though you don't explicitly state it, I can't believe that the two are competitors, so there ...

Tom, outlines the options pretty well. One point to consider is whether you can still comply with your company's COI policy. To do that your startup must not (1) compete with, (2) do business with, or (3) act as a vendor of your current employer. You state that your startup will be a vendor to companies in your employer's space, but this is not ...

The existing clients are a red herring here. Whether you are an employee, contractor or provider, as long as the work gets done, they shouldn't need to know the nature of the relationship between you and your current boss. The remaining answer is simple: Draw up a contract between your current boss and your new business, detailing what needs to be done ...

Since your employer is from out of state, the California moonlighting provisions Dana cited may or may not apply to you. For an empirical case and outcome, see: From http://lawzilla.com/content/noncompete.shtml Out-of-State Agreements and Multi-State Employer Strategies Who wins often depends upon a race to the courthouse. For multi-state ...

CA Labor Code Section 2870(a) says, generally, that inventions developed entirely on the employee’s own time without using the company’s equipment, supplies, facilities or trade secrets, and that do not relate to or result from the employer's business or anticipated R&D belong to the employee. If this matter is important enough, you should ask a lawyer ...

If you partner doesn't understand how user experience affects product value & success, it sounds like you have a major disconnect on product management. In startups, this is a critical point. Try talking to him and figure out which features can be dropped from the first deployment so that the product is still valuable to customers but doesn't require as ...

I will personally feel that this is more of an ego clash. We need to understand the requirement of business. There is no limit to fine tune a product. For very large companies, two future releases are already on work, when a stable version is released. Efficiency has no limits effectiveness should be targeted. One should understand the partners viewpoint. ...