# Legal Matters ### Incorporation paperwork See[📄Step 3: File incorporation paperwork](https://handbook.opencoreventures.com/ocv-employees/core-vc-operations/portfolio-company-formation-process/incorporation-steps-1-8) ### Term sheet For OCV company’s Seed round: 1. Options pool expectation: see 2. Board seat: see Board Composition 3. Terms not to be in conflict with OCV’s [safe side letter](https://handbook.opencoreventures.com/company-formation/step-6-banking-systems-set-up/#425ed475d9304e679589d18235b6ae8e) ### Preferred financing round OCV expects the following rights in our companies Seed Preferred financing round: 1. Major Investor status - impacts information, pro-rata, inspection, right of first refusal, and co-sale rights 2. Qualified Key Holder status - first common director seat and drag-along trigger are tied to the vote of a majority of Qualified Key Holders 3. Drag-along triggers are not typically exercised in practice and generally not a point of contention 4. The ability to vote for common director board seats is an important right for OCV given our ownership stake (especially common shares) in OCV companies ### Standard Equity Incentive Plan Provisions #### **Waiver of Information Rights** The plan includes a waiver of statutory inspection rights (Section 220 of the Delaware General Corporation Law), which limits individual stockholders' ability to demand access to company books and records. As more employees exercise options, the stockholder base grows. Without this waiver, any stockholder (including a former employee) could formally demand to inspect company records, creating significant administrative burden. The waiver addresses this at scale but has legal limits: Delaware courts have held that it may not be enforceable if used to shield fraudulent activity. #### Requirement to Execute Stockholder Agreements The plan requires option holders, upon exercise, to execute the same agreements that other stockholders have signed - typically a right of first refusal and co-sale agreement, stockholders' agreement, and/or voting agreement. Investors at Seed and beyond require all stockholders to be bound by the same transfer restriction and voting agreements. A single unbound common stockholder can complicate or block a financing round. Including this requirement in the plan itself avoids the need to separately collect joinder agreements from each employee at exercise time, which eliminates the risk of a non-responsive former employee creating a structural gap on the cap table.
### 83b Election 1. A copy of the completed election form, 2. Proof of certified mail sent to the IRS (such as a photo of a receipt with tracking number), postmarked within the 30-day deadline, and 3. Proof of a self-addressed return envelope from the IRS. To document the completion of this process, founders must provide the following three items to the company’s legal team via e-mail: > Department of the Treasury\ > Internal Revenue Service\ > Austin, TX 73301-0215\ > USA The appropriate IRS office to send the election to can be found at the [IRS website](https://www.irs.gov/filing/where-to-file-addresses-for-taxpayers-and-tax-professionals-filing-form-1040) (those with no payment enclosed). Non-US founders should use the following address. 83b Election form needs to be completed by the founders and sent to the IRS (via certified mail with return receipt) or submitted electronically on the IRS website within 30 days of the effective date of the stock purchase agreement (the date wires are sent). \ \ For electronic filing, create a profile on the IRS.gov website, and fill out Form 15620, i.e. Section 83(b) Election, using information provided in your 83(b) document. Once complete, take a screenshot of the submission completion page as evidence of the date, though the form is instantly transmitted.\ \ For physical mail, while digital signatures are accepted by the IRS, OCV recommends printing and completing the form with a wet signature to remain compliant regardless of any IRS process changes.\ \ When filling out the 83(b) form, it will ask what date the shares were transferred to the founder. This is the same date the founder purchased their shares.\ \ A self-addressed return envelope needs to be included as well. As part of the company formation process, the Legal Team will provide the latest instructions and template form for 83b Election. For non-US founders, OCV will assist with creating a FedEx return label to be included with the self-addressed return envelope. 1. a stockholder purchases common stock subject to vesting (i.e., typical OCV founder shares issued during the company formation stage); or 2. if an option holder [early exercises](https://handbook.opencoreventures.com/company-ops/people-ops/employee-compensation-and-benefits/equity-compensation#stock-options) an option that is subject to vesting. 83(b) elections are required to be filed only if/when: \*OCV team will confirm the common share purchase is complete and email the founder to start this next step. Filing an IRS 83b Election is extremely crucial for founders and the company. Failing to do so has significant tax implications to both. \
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