TLDR:
An RSPA is a legal contract used when issuing restricted stock to founders or employees, defining the purchase terms, vesting schedule, and the company’s right to repurchase unvested shares upon termination.
RSPA vs. Option Grant — Tax and Control
Founders typically receive their equity through restricted stock purchase agreements rather than options because purchasing stock (even at minimal cost) creates better tax outcomes than options. When a founder buys restricted stock at fair market value at founding (when it’s essentially zero), there is no taxable income and the capital gains holding period begins immediately — enabling long-term capital gains treatment on the full appreciation. Options, by contrast, create an AMT event at exercise and ordinary income if exercised above the 83(b) election window.
RSPA Structure
A Restricted Stock Purchase Agreement is the document founders typically use to acquire their initial founder shares at incorporation. The agreement requires the founder to “purchase” their shares — often at par value, paid in cash or in exchange for IP contribution — and subjects the shares to a vesting schedule that aligns founder retention with the company’s success. The vesting mechanism is enforced through a company repurchase right: if a founder leaves before fully vesting, the company can repurchase unvested shares at the original purchase price.
Tax Considerations
RSPAs typically pair with 83(b) elections — by purchasing shares at fair market value at incorporation (when value is essentially zero), and electing to be taxed at grant, founders convert all future appreciation into capital gains rather than ordinary income. This is one of the most powerful tax-planning techniques available to founders, but it requires precise execution: missing the 30-day 83(b) deadline forfeits the benefit irreversibly.