Founder lock-ups: can you sell vested shares?

Suppose Jacob, Tim and Celina run a startup. Celina has found a specific investor willing to buy part of her holding. She intends to stay with the business, and the shares concerned have completed the vesting process set out in the documents. The purchase price would go to Celina, not the company. This sale of existing shares is a secondary transaction.

Tim checks the last funding round’s documents and finds a three-year founder lock-up. Only 18 months have passed since closing. Jacob checks the company’s articles: the transfer also requires company consent. A buyer and an agreed price are a useful start, but Celina needs to resolve both restrictions before promising a closing date.

Vesting does not automatically make shares freely transferable. A lock-up restricts transfers for an agreed period, subject to its scope and exceptions. Assess the investment documents and company rules together. The commercial questions travel well across markets; the legal effect of the restrictions depends on the applicable law. The implementation sections below use a Polish sp. z o.o., a limited liability company.

Terms with a dotted underline have short explanations you can return to as you read.

What this guide covers

In brief

• A lock-up can cover shares the founder retains after vesting.
• Its start date, duration, scope and exceptions depend on the agreement. Three years in this example is a negotiated term.
• An investment-agreement waiver and company consent may be separate requirements.
• A contractual promise not to sell does not necessarily have the same effect as a restriction in the company’s articles.
• An expired lock-up does not remove other approvals, shareholder rights or transfer formalities.

What should a founder lock-up achieve?

Define how long the relevant shares are restricted and on what conditions they may be transferred. An investor may want stability in the shareholder group and protection against a founder selling a large stake immediately after a round. The founder may want some liquidity without leaving the company.

Those interests can be addressed in the documents. A partial sale does not itself mean a founder is stopping work, just as keeping shares does not guarantee continued contribution. Commitments about involvement, departure and share repurchase need their own treatment.

For Celina, the first question is the clause’s scope. Does it cover every sale, only a specified portion, or a wider set of disposals such as gifts and pledges? A clause heading will not answer that. A transfer to a founder-controlled holding company also raises different questions from a sale to an independent investor.

Why can a lock-up survive vesting?

Vesting links the founder’s eventual holding to contribution or time. A lock-up governs disposal of that holding. In a reverse-vesting structure, a founder may already own the shares, with documents providing for repurchase or another settlement of part of the holding on early departure. Completing the vesting process does not remove a separate transfer restriction.

Celina needs two timelines. One shows which shares she can retain under the vesting arrangements. The other starts with the round and shows how long the lock-up lasts. Different end dates are not necessarily a drafting mistake, but they matter when planning liquidity.

Our founder vesting and cliff guide deals with retention and departure mechanics. Here, assume Celina’s right to retain the proposed sale shares has already been established.

Which permitted transfers should you negotiate?

An exception should identify the transaction and its conditions. Merely saying that consent may be requested leaves much of the process for a later negotiation.

Agree:

• when the lock-up begins and ends, including whether a new round restarts it;
• which shares it covers and whether any portion can be released earlier;
• who may approve a sale, the required form and the response timetable;
• whether limited secondaries are allowed and whether a cap applies per transaction or in aggregate;
• conditions for transfers to a founder-controlled holding company, including continued control and accession to the shareholders’ agreement;
• treatment of an agreed company exit, a founder’s death and other specified events.

Celina could seek approval for a defined holding and named buyer while continuing her involvement in the startup. A transaction-specific waiver need not release the entire holding from the lock-up. Identify who grants it, what it permits and which obligations remain.

Check that the proposed restriction is legally permissible. A single duration rule does not apply to every company form. For example, Article 338(1) of the Polish Commercial Companies Code (Polish source) limits agreements restricting disposal of shares in a Polish joint-stock company to five years. Do not automatically apply that rule to a sp. z o.o. This does not make every restriction permissible: its wording and purpose must still stay within the applicable legal limits.

Polish sp. z o.o.: investor approval and company consent

Review the investment agreement and the articles separately. An investor may waive an obligation owed to it, but its email does not automatically provide consent required from the company.

Under Article 182 of the Polish Commercial Companies Code, the articles may make a share transfer subject to company consent or restrict it in another way. The default is written management-board consent, but the articles can provide different rules. The person who negotiated the round is not necessarily the person authorised to approve the transfer.

If consent is refused, Article 182 provides a default route through the registry court where important reasons exist. In that process, the company may nominate another buyer. If there is no agreement, the court determines the price and payment deadline on an application by the shareholder or company. Check the articles before relying on this route: paragraphs 3 to 5 apply unless the articles provide otherwise.

A court route concerning company consent does not automatically release a separate promise under the investment agreement. Address each restriction on its own terms.

What if a founder sells despite the restriction?

Identify where the restriction comes from before assessing the transfer and the founder’s liability. Different arrangements do not necessarily produce the same consequences.

For a contractual promise not to dispose of a transferable right, Article 57 of the Polish Civil Code (Polish source) is relevant. A person may undertake not to make specified disposals, but the promise does not itself remove the power to dispose of the right. Breaching it therefore does not automatically make every sale invalid.

That does not create a safe option to sell first and pay later. Contractual claims depend on the agreement and the conditions for liability. A contractual penalty must be validly agreed; paying it does not generally release the obligation without the creditor’s consent. Article 483 of the Civil Code addresses that point. A dispute may also require assessment of a claim to have the sale declared ineffective against the person entitled to protection. Civil Code Article 59 requires, among other things, that performing the contract makes satisfaction of that person’s claim impossible and that both parties knew of the claim, or that the transaction was gratuitous. It also sets a one-year period from the contract’s conclusion. A lock-up does not automatically establish entitlement to that remedy.

A missing consent required under the articles needs separate analysis. Do not treat the deal as effectively closed simply because the buyer paid and both parties signed. Assess whether later consent is possible and what it would do, taking account of Civil Code Article 63 and the specific share-transfer rules. Calling every breach an “invalid contract” obscures these distinctions.

For Celina, the immediate task is to establish the complete approval sequence before accepting payment and committing to transfer the shares on a fixed date.

What remains before a secondary can close?

A lock-up waiver is one step. Other shareholders may have priority purchase rights or rights to join the sale. The documents may also require the buyer to join the shareholders’ agreement. Our tag-along and drag-along guide explains how those mechanisms interact.

For a Polish sp. z o.o., a transfer generally requires a written agreement with notarised signatures. Certain companies incorporated using the prescribed template may also use a transfer template in the official IT system. After the transfer, notify the company and provide evidence; this matters for the transfer’s effectiveness towards the company. See Articles 180 and 187 of the Commercial Companies Code.

Tim can gather the funding documents, Jacob can check procedures and approvals, and Celina can agree a realistic timetable with the buyer. The outcome should establish whether this particular sale can proceed and which steps remain. Completing vesting alone will not answer those questions.

Terms and legal references explained

Secondary transaction

A sale of existing shares. Here, Celina sells her shares and receives the purchase price. This differs from subscribing for newly issued shares, where the company receives funding.

Vesting

Rules linking a founder’s eventual holding to time or contribution. Completing vesting may establish the right to retain shares under the documents, while separate transfer restrictions can still apply.

Lock-up

An agreed restriction on share transfers for a period. The documents define the shares, transactions, exceptions and approvals involved. Expiry does not automatically remove other transfer restrictions.

Reverse vesting

A structure in which the founder already owns shares, but early departure can trigger a repurchase or other agreed settlement of part of the holding. As vesting progresses, fewer shares remain subject to that mechanism.

Company consent: Polish Article 182

A Polish sp. z o.o.’s articles may require company consent to a transfer. The default is written management-board consent, but the articles may provide otherwise. An investor’s lock-up waiver does not automatically satisfy this separate company requirement.

Through our startup legal support, we can compare a proposed secondary with the shareholders’ agreement and company articles, including Polish implementation. For a discussion about a founder share sale, bring the current documents, the proposed holding and buyer, and the intended closing date.