Introduction

Many clients ask about how they can work with their lawyer to create legal documents on the Fidelity Private Shares platform. Who will perform which tasks, and who will take the lead in running the account, are decisions largely dependent on personal preference and business need. However, this article will provide a sample use case of how both a client and their attorney may interact on the platform to grant shares to their employees. As an aside, Fidelity Private Shares is flexible and can accommodate whichever working style is preferred by the client.

Example use case

First, the client hires a new employee

In this scenario, the CEO has extended an offer of employment to their new Chief of Staff, which they have generated on the platform. As equity shares have been promised in the offer letter, the next step is to create the documents to grant those shares to the new employee. To do this, either the CEO or their attorney will run the Grant Shares or Options workflow. For this example, we will assume the CEO prefers to run the workflow.

Running the Grant Shares or Options workflow

All of the details of the new employee's grant will be captured in the Grant Shares workflow, including the vesting period, vesting frequency, the commencement date (typically the employee's first day), and other key terms (acceleration, etc.). The platform automatically takes this information and generates the grant document, as well as a board consent to approve the new grant. At the workflow's Checkpoint, the client will have the option to send these documents to their attorney for legal review. There will also be an opportunity to make edits or changes to the created documents at the Checkpoint, before sending over to the attorney. In this example, the CEO will send the documents to their lawyer to have a look.

Legal Review

The company's lawyer receives an email message that their client would like them to log in to Fidelity Private Shares and review some documents. After logging in, the attorney will be able to read the documents in full and make any edits. If the lawyer makes no edits, then the documents go out for signature immediately upon clicking Continue in the workflow. If the lawyer does make edits, then these changes will be routed back to the CEO for approval.

CEO accepts changes, deploys documents for signatures

Assuming that the lawyer proposed some small changes, the CEO will review the suggestions and either accept the changes or ignore them. For this example, the CEO will accept the suggested changes and clicks Continue to send the documents out for signing. The next step is for the board of directors to sign the board consent.

Board signatures

The Board of Directors receives an email asking them to log into Fidelity Private Shares and sign the board consent electronically in their account. The board members can do this on their computer or their mobile phones. Once the board signs the board consent, it's time for the ISO grants to be signed.

President signature

Next, the president of the company will log in and sign the grant in the signature block reserved for the company's signature. After the president does this, the platform will automatically ask the new employee to sign their grant.

Employee signs

The new employee receives an email message asking them to log into Fidelity Private Shares (and create an account if they don't yet have one) and sign and accept their grant agreement. Once they do this, they'll each be able to see their grant and vesting schedule chart anytime in their account. They'll also be able to click the Exercise Now button and exercise shares if their vesting allows.

Finalizing the Grant Shares workflow

Once everything has been signed and the workflow has been finalized, Fidelity Private Shares will automatically add the new employee's grant to the cap table, as well as route the grant document and board consent to the appropriate folders in the data room.

Final Note

Fidelity Private Shares enables clients to draft their own legal documents to help save on attorney fees, so that their runway dollars can be redirected to other business needs. The legal review process can dramatically cut down the time and input needed from the company's lawyer, while giving clients peace of mind that the documents they created are legally sound. However, ultimately, each client will need to discuss with their attorney how they will work together on the Fidelity Private Shares platform.

Sample scenarios are for illustrative purposes only.

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