What Is Bad Leaver?
A bad leaver is a shareholder, founder or employee who leaves a company under negative circumstances and faces reduced or forfeited rights to their shares or options.
Bad Leaver Meaning
The bad leaver meaning centres on protecting the company and remaining shareholders. To define bad leaver in practice, it typically applies when someone exits due to misconduct, breach of contract, resignation without approval or gross negligence. A clear bad leaver definition often requires the individual to forfeit unvested equity and sell vested shares back at nominal value or a discounted price. Bad leaver clauses stand for accountability and are commonly included in shareholders’ agreements, option plans and founder vesting arrangements.
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