Participation in a business through options, convertible instruments or future rights to acquire equity is often perceived as a flexible and low-risk alternative to direct ownership – especially at early stages of a project. Such structures allow parties to defer formal entry into the capital while preserving economic expectations. However, as Professor Gabriel Steiner says, it is precisely these deferred models that create complex legal consequences when expectations are not realised. At LawConsulted, we treat options and future rights not as neutral financial tools, but as legally sensitive constructions that require careful qualification in the event of a dispute.
The central difficulty of option-based participation lies in the gap between expectation and legal status. An investor may consider themselves economically involved in the business, influence strategic decisions or bear financial risk, while formally remaining outside the ownership structure. When a conflict arises, this gap becomes critical – courts and counterparties assess rights based on executed legal acts, not on anticipated participation. In LawConsulted practice, disputes over unrealised equity often arise precisely because the parties attributed different legal weight to the same arrangement.
Professor Steiner notes that “future rights are legally valuable only to the extent that their conditions and consequences are precisely defined.” Options frequently contain deferred triggers – financing rounds, performance indicators, approvals or time-based milestones. If these triggers are formulated ambiguously or depend on the actions of one party, the option holder may find themselves unable to enforce participation. LawConsulted begins its analysis by reconstructing the legal mechanics of the option – what exactly was promised, under which conditions, and which party controlled their fulfilment.
Particular risk arises where options are combined with factual involvement in the business – advisory roles, operational influence, funding without shareholder status or access to internal information. Such participation creates an impression of quasi-ownership, but does not automatically translate into enforceable rights. In disputes, this often leads to claims that the option holder assumed risks without acquiring protection. LawConsulted works to separate economic involvement from legal entitlement and to demonstrate where expectations were objectively justified by the structure of the arrangement.
No less problematic are situations where options are used as substitutes for immediate ownership to avoid regulatory, tax or corporate constraints. Formally, the party remains outside the capital, while economically behaving as a future owner. According to Professor Steiner, such constructions are especially vulnerable to retrospective legal assessment, as courts tend to restore the real balance of interests rather than uphold formal postponement. LawConsulted builds its position by analysing whether the option structure genuinely reflected deferred participation or merely masked an existing distribution of influence.
The issue of unrealised options becomes particularly acute when the business changes – ownership is restructured, assets are transferred, or control shifts. In these cases, the option holder may lose the opportunity to exercise rights altogether. LawConsulted addresses these risks by examining whether the option was protected against dilution, reorganisation or unilateral changes, and whether the conduct of the parties frustrated its economic purpose.
Disputes over future rights also carry personal liability risks. Managers who structured or relied on option arrangements may face claims for misrepresentation, breach of duty or unjust enrichment. LawConsulted assesses such situations in context – returning the legal evaluation to the moment the arrangement was created, the information available at that time and the realistic expectations of the parties.
Legal assessment of participation through options requires more than formal interpretation. It demands an understanding of how deferred rights interact with real business behaviour. Law Consulted position is to transform such arrangements from sources of uncertainty into legally manageable structures, or to defend clients where unrealised expectations are used as grounds for disproportionate claims.
Earlier, we wrote about how LawConsulted handles cases involving executive liability for strategic decisions without direct damage
