Founders agreement

An Agreement between founders, that outlines all the important aspect of their relationship

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FOUNDER AGREEMENT IN INDIA

A founder agreement is a contract between the co-founders of a company. It covers aspects such as the ownership, duties, roles, responsibilities, and the initial investment of each founder.

The essence of the founders’ agreement is that it assigns a specific role to the founders of an enterprise and thus preventing any ambiguity amongst them within the organization in the future.

This helps the entrepreneurial organization to achieve their goals and objectives in a better and amicable way without any conflicts amongst the founders, further facilitating better relationships between them.

Before drafting a founders’ agreement, it is essential for the founders to discuss openly the aspects of the agreement. Generally, the agreement is made during the incorporation of the organization.

Some of the essential elements of a founders’ agreement are as follows:

 

  • Business Definition The agreement must define the potential of the enterprise clearly. The objectives of the venture, vision, and mission are to be defined.
  • Ownership The ownership element of the agreement addresses the percentage or number of shares which is held by each co-founder.
  • Capital The Capital Clause sets out the initial investment contributed as capital by each founder.
  • Roles and ResponsibilitiesThis ensures that the roles and responsibilities of each founder like decision-making, powers, duties etc are set out clearly to prevent any vagueness and ambiguity in the future.
  • CompensationIt is also important to clarify in the agreement the compensation or salary that the founders are entitled to draw.
  • DissolutionThe dissolution clause talks about the possibility of winding-up and liquidation of the enterprise. It sets out the manner of distribution of proceeds, assets and liabilities amongst the founders at the time of winding up or liquidation of the enterprise.

 

WHAT IS A FOUNDER AGREEMENT?

It is a contract governing business relationships of company’s founders who enter into such a contract to regulate uncovered matters in company’s agreement. It sets out the responsibilities, rights, obligations and liabilities of every founder.

 

WHY FOUNDER AGREEMENT IN INDIA IS NEEDED

It is essential to enter into such agreements to solve issues in case any difficulty arises. In absence of an agreement to this effect, one partner may walk away and use

Knowledge of the business and know-how for competition.

One may also get into a situation where one partner takes a back step and just reap the benefits of hard labour of the other partner.

None of these positions are favourable for the business and are undesirable. Thus if one does not engage in future planning, he/she might end up jeopardizing the business even before it starts.

 

FOUNDER AGREEMENT DRAFTING PROCESS IN INDIA

 

  • The responsibilities and roles of each co-founder are to be established to have a well-functioned management system.
  • Allocation of ownership of new enterprise amongst founding team. Upfront splitting up of equity between the founders is imperative to ensure that there are no hurt feelings or misunderstandings after things come into play and this exercise is to be nailed down very carefully.
  • Implementation of terms for market vesting for all founders’ equity so that future planning can be done.
  • When co-founders start reiterating an idea and cone up with a business plan or start developing and building a platform or a product, intellectual property (IP) is created. It is necessary to ensure that whatever developments are done in IP do not belong to an individual but the entity.

DOCUMENTS REQUIRED

All the Documents are required only in scanned form, you can attach the document in the form after payment or email it to us on documents@companyvakil.com . Feel free to get in touch for any query.

Founder Agreement Sheet

Information sheet

You will be asked to fill it after making payment or email it to us

what will you get?

Certificate of Founder Agreement

Founders Agreement

Rubber Stamp

4 free reviews and changes as per your need.

total time taken

2-3 days

Founder's Agreement

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FREQUENTLY ASKED QUESTIONS (FAQ's) ABOUT FOUNDER'S AGREEMENT IN INDIA

 

What is a Founder’s Agreement?

It is an agreement that gives an outline of various roles and responsibilities of the founding members of a Company, the amount of equity vested in it and the ownership of intellectual Property formed by them plus their roles and responsibilities. It even takes in consideration about their departure or Death.

 

Benefits of a Founder’s Agreement in India?

Following are the benefits of having it :-

1. It Clears the Air on may matters that may be undiscussed between the co-founders 
2. It gives an opportunity to early team members to discuss the important matters and clearing their doubts and having a better relationship. 
3. Further on it defines the roles of all the co-founders and early team members. 
4. It leads to a good understanding amongst the founding members.

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