100% Ownership and 30% profit to sale director
Perhaps an example will help make it more clear. Any given year:  Revenue:  200K, profit 60K You get 40K in profit, plus any salary, he gets 20K Next year you attract the attention of a competitor and they offer and you accept to sell.  You would get 100% of the proceeds. This is kind of a bad deal for him as you could easily play accounting tricks to diminish the company's profits and reduce his pay.  For the given example, you could pay yourself a 60K bonus and reduce the profit to zero and eliminate his compensation.  There should probably be a revenue metric included in his compensation. Edit: It is really nice to hear you have a desire to treat this person fairly.  Honesty in business is necessary for long term success.  I would simply make his salary dependent upon the revenue he generates.  For example, lets say you can make a widget for 4 and you expect to sell them for 10.  Your profit would be 6, and with the suggested split he would receive $2, you $4. Instead I would have him receive like 15% of the revenue generated This allows for some discounts for bulk items and covers the cost of processing sales.  It also allows him to share revenue with his staff.   Alternatively you could also do a split.  Perhaps 7.5% of revenue and 10% of profit.
It depends. If the investor bought newly-issued shares or treasury shares, the company gets the money. If the investor bought shares already held by the owner, the owner gets the money. A 100% owner can decide how to structure the sale. Yet, the investor may only be willing to buy shares if the funds increase the company's working capital. You have only sold 200 shares for $4.75 from those bought for $3.15. So your profit on those 200 shares is $1.60 per share or $320 or 51%. From that you have 110 shares left that cost you $3.15 and 277 shares that cost you $3.54. So the total cost of your remaining shares is $1,327.08 (110 x $3.15 + 277 x $3.54). So your remaining shares have a average cost of $3.429 per share ($1,327.08/387). We don't know what the current share price is as you haven't provided it, nor do we know what the company is, so lets say that the current price is $5 (or that you sell the remaining 387 shares for $5 per share). Then the profit on these 387 shares would be $1.571 per share or $607.92 or 46%. Your total profit would then be $320 + $ 607.92 = $927.92 or 47% (note that this profit neglects any brokerage or other fees, as you have not provided any). Edit due to new info. provided in question With the current share price at $6.06 then the profit on these 387 shares would be $2.631 per share or $1018.20 or 77%. Your total profit would then be $320 + $1018.20 = $1338.20 or 75% (note that this profit neglects any brokerage or other fees, as you have not provided any). From my understanding, only A and B are shareholders, and M is a managing entity that takes commission on the profit. Assuming that's true.  At the start of the project, A contributes $500,000. At this point, A is the sole shareholder, owning 100% of the project that's valued at $500,000.  The real question is, did the value of the project change when B contributed 3 month later. If the value didn't change, then A owns 33.33%, and B owns 66.66%. Assuming both A and B wants to pay themselves with the $800,000 profit, then A gets a third of that, and B gets the rest.  However, if at the time of B's contribution, both parties agreed that the pre-money of the project has changed to $1 million, then B owns half the project valued at 2 million post-money. Then the profit would be split half way. You can either borrow money... credit card, line of credit, re-finance your home, home equity line of credit, loan, mortgage, etc. Or you have other invest in your company as equity.  They will contribute $X to get Y% of your company and get Z% of the profits.  Note amount of profits does not necessarily have to equate to percentage owned.  This makes sense if they are a passive investor, where they just come up with the money and you do all the work.  Also voting rights in a company does not have to equate to percentage owned either. You can also have a combination of equity and debt.  If you have investors, you would need to figure out whether the investor will personally guarantee the debt of your company - recourse vs non-recourse.  If they have more risk, they will want more of a return. One last way to do it is crowdfunding, similar to what people do on Kickstarter.  Supporters/customers come up with the money, then you deliver the product.  Consulting practices do something similar with the concept of retainers. Best of luck. I know the general principles of acting as a director in a company, and am familiar with the rights of shareholders. In the last ten years or so, I believe Australia has introduced legislation that strongly punishes those directors who do not act in a professional or prudent manner. While I will of course attempt to fulfill the duties required - I am new to conducting business at this level, and am concerned about mistakenly breaching some unknown rule/law and being subject to repercussions that I just don't know about. As you have already stated, the key to being director in a company is the additional responsibility. Legally you can be held in breach. At the same time you will be able to influence your decision much better if you a director and thus safeguard your interest. If you are only a shareholder, you cannot be held responsible for decision by company, individual malpractice may still be applicable, but this is less of a risk. However over a period of time, the board can take certain decision that may marginalize your holding in the company. Everyone that owns a share of stock in a company is part owner. Some just own more than others. According to Apple's latest proxy statement he owns 5.5 million shares of the 914 million shares outstanding. So he owns approximately 0.6% of the company.  If he owned more than 50% of the company's outstanding stock he would effectively control the board of directors by being able to pick whoever he wanted.  Then he would control the company. Very few publicly traded companies are that way. Most have sold off parts of the company to the public in order to raise cash for the company and make their investment more liquid. "Owning more than 50%  of a company's stock normally gives you the right to elect a majority, or even all of a company's (board of) directors. Once you have your directors in place, you can tell them who to hire and fire among managers. There are some things that may stand in the way of your doing this. First, there may be a company bylaw that says that the directors can be replaced only one ""class"" at a time, with three or four ""classes."" Then it could take you two or three years to get control of the company. Second, there may be different classes of shares with different voting rights, so if e.g. ""A"" shares controlled by the founding family gives them ten votes, and ""B"" shares owned by the other shareholders, you may have a majority of total shares and be outvoted by the ""A"" shares." Is my understanding correct? It's actually higher than that - he exercised options for 94,564 shares at $204.16 and sold them for $252.17 for a gain of about $4.5 Million.  There's another transaction that's not in your screenshot where he sold the other 7,954 shares for another $2 Million. What do executive directors usually do with such profit?  It's part of his compensation - it's anyone's guess what he decided to do with it. Is it understood that such trade profits should be re-invested back to the company? No - that is purely compensation for his position (I'm assuming the stock options were compensation rather then him buying options in the open market).  There generally is no expectation that trading profits need to go back into the company.  If the company wanted the profits reinvested they wouldn't have distributed the compensation in the first place. I believe you can easily make tresholds for what constitute a partial owner. If I work for GE and buy a share, I'm not exactly a partial owner.  Anything under 10% for companies making, I don't know, less than 50 Mil in revenue, you're an employee. Larger companies, 5%.  That's just an idea, could be refined but, yeah... If a company is public, and they record a 2016 profit of 100mil. Say there is shareholder A and shareholder B who are both wealthy and own 25% each of the company. Say the remaining 50% of shares are owned by a number of funds/small time investors.   So 2016 profits are 100mil, lets say there is a dividend. Can the company still award a larger share of profits to the two big shareholders? I.e. say 50 mil of the profits go into dividend payments and another 20 mil as retained earnings to be reinvested into future projects, can the remaining 30 mil of profits be split and given to shareholders A and B? The person holding the majority of shares can influence the decisions of the company. Even though the shareholder holds majority of the shares,the Board of Directors appointed by the shareholders in the Annual General Meeting will run the company. As said in the characteristics of the company,the owners and the administrators of the company are different. The shareholder holding majority of the shares can influence the business decisions like appointing the auditor,director etc. and any other business decisions(not taken in the ordinary business) that are taken in the Annual General Meeting. "Each company has X shares valued at $Y/share. When deals like ""Dragon's Den"" in Canada and Britain or ""Shark Tank"" in the US are done, this is where the company is issuing shares valued at $z total to the investor so that the company has the funds to do whatever it was that they came to the show to get funding to do, though some deals may be loans or royalties instead of equity in the company. The total value of the shares may include intangible assets of course but part of the point is that the company is doing an ""equity financing"" where the company continues to operate. The shareholders of the company have their stake which may be rewarded when the company is acquired or starts paying dividends but that is a call for the management of the company to make. While there is a cash infusion into the company, usually there is more being done as the Dragon or Shark can also bring contacts and expertise to the company to help it grow. If the investor provides the entrepreneur with introductions or offers suggestions on corporate strategy this is more than just buying shares in the company. If you look at the updates that exist on ""Dragon's Den"" or ""Shark Tank"" at least in North America I've seen, you will see how there are more than a few non-monetary contributions that the Dragon or Shark can provide." I don't know about the liquidation. The capital doesn't evaporate, its source just becomes the corporation itself. The corporation becomes the sole shareholder and acts at the behest of the board. The board then decides both board matters and shareholder matters.  Once I talked that through, I realized no one would do this. If the board is in complete control, why clump the ownership together. The directors would be better served by clearly delineating their ownership interests by purchasing shares directly. "The part that I find confusing is the loan/stock hybridization.  Why would the investor be entitled to a 30% share if he's also expecting to be getting paid back in full? This is the part that's making me scratch my head.  I can understand giving equity and buying out later.  I can understand giving equity with no expectation of loan repayment.  I can understand loan repayment without equity.  I can even understand collateralizing the loan with equity.  I can not understand how ""zeroing out"" the loan still leaves him with a claim on 30% of the equity. Would this be more of a good will gesture as a way to thank the investor for taking a chance?  Please forgive any naivety in my questions." "Companies normally do not give you X% of shares, but in effect give you a fixed ""N"" number of shares. The ""N"" may translate initially to X%, but this can go down. If say we began with 100 shares, A holding 50 shares and B holding 50 shares. As the startup grows, there is need for more money. Create 50 more shares and sell it at an arranged price to investor C. Now the percentage of each investor is 33.33%. The money that comes in will go to the company and not to A & B.   From here on, A & C together can decide to slowly cut out B by, for example: After any of the above the % of shares held by B would definitely go down."