October 14, 2026
Unvested shares are shares you already own, but which the company can buy back at the price you paid (typically $0.00001 per share for founder stock) if you leave before they vest. That is what vesting means for restricted stock: the company’s repurchase right lapses a little at a time. Because you own the shares from day one, unvested shares vote, appear on the cap table and need an 83(b) election within 30 days of the date the shares are issued.
Key takeaways
Vesting is often described as earning shares over time, but for restricted stock that isn’t technically how it works. When a company grants restricted stock, it issues 100% of the shares under a restricted stock purchase agreement. One of the restrictions is that the company may buy back the unvested portion if the holder’s service ends. That repurchase right lapses for a portion of the shares each month. This structure is sometimes called reverse vesting, especially for founders.
Example: Gregarious Games Inc. issues Kiera 48,000 shares on a four-year monthly vesting schedule (no cliff, to keep the example simple). She owns all 48,000 shares on the grant date, but the company can repurchase all of them. Each month the company loses the right to repurchase 1,000 shares (1/48 of the total). After 12 months it can repurchase only 36,000 shares, and after 48 months it can’t repurchase any. Kiera has owned all 48,000 shares the entire time.
See Restricted Stock and Vesting Schedule.
The company can buy back all the unvested shares at the price the holder paid, typically $0.00001 per share for founder stock. That includes every share if the person leaves before the cliff. The repurchase isn’t automatic. The board approves it and the company sends a repurchase notice and pays for the shares within the window the stock purchase agreement sets, often 90 days or so after departure. If the company misses that window, it generally loses the right to buy those shares back, so act promptly. The holder keeps the vested shares. See What Happens to Startup Stock When You Leave the Company.
Yes. Kiera owns her shares, so she has the rights of any stockholder, including voting, on all 48,000 shares from the grant date.
No, whether vested or not. A stock option is the right to buy shares in the future at a fixed price. Until it is exercised, the holder doesn’t own any shares, so there is nothing to vote. See Stock Options.
Yes. Unvested restricted shares are issued and outstanding, so they appear on the cap table and count toward fully diluted shares. See Authorized, Outstanding and Fully Diluted Shares.
Yes. Because the shares are subject to vesting, the holder should file an 83(b) election with the IRS within 30 days of the date the shares are issued. There is no extension. Without it, each vesting date can be a taxable event. Talk to a tax advisor about your situation, and see 83(b) Election.
If you’d like help with founder or employee stock, contact us.
