Founders agreement In Delhi NCR

Founders Agreement in Delhi NCR

A founder’s agreement is an official agreement between all the founding members of a firm and it determines the objectives and vision of the firm along with the roles and responsibilities of its members. It lays down the terms and conditions between the co-founders regarding the manner in which the business is to be carried. It is a written agreement clearly specifying the roles and responsibilities of its founding members. The clear specification of the roles and responsibilities of the founders at the initial stage of the start-up will help the business to avoid conflicts with respect to the share of profits, company proceeds etc. Also, a founder’s agreement lays down the objectives and vision of the company and sets up expectations and goals of all the co-founders by assigning each one of them specific roles and responsibilities.

A good founder’s agreement include definition of the business, roles and responsibilities of each of the co-founders, ownership details, details of capital raised by the founders and investors, exit strategy, company dissolution, dispute resolution, salary drawn by each of the co-founders along with some miscellaneous provisions like intellectual property rights , non-compete clauses etc. The founder’s agreement should be such that the ownership of the Intellectual Property should be assigned to the enterprise rather than an individual. If the intellectual property is assigned to individuals in the enterprise, then it will render the startup less meaningful. Therefore, one should ensure that the intellectual property is safeguarded under the business name. A founder’s agreement provides insurance to its members in case of any dissonance among its co-founders. Therefore, it is advised that a founder’s agreement should always be drafted along the lines of the business with the help of a legal team and must state all the provisions associated with the business more precisely and efficiently.

The city of Delhi NCR holds an apt location to discuss about business. The city holds a very modern developmental approach towards the business ventures made here. The young population in this city is blooming with ideas and is a perfect place to begin ventures towards startups. Apart from being a host to business, it is also a place where one witnesses a blend of traditional monuments, rich political history and an inspirational and enthusiastic youth.   

Reasons to have a Founders Agreement in Delhi NCR

Following are the reasons for co founder agreement in Delhi NCR:-

1. Founder’s agreement helps in decision making process as it clearly outlines the roles and responsibilities of its founding members. With the help of founder’s agreement, the founders of the company can decide the, who will take major decision, who is responsible for marketing and leadership of the company etc.
2. In founder’s agreement, the ownership strategy of the business is clearly defined.  It helps to decide the amount of share of profits that each member of the company will get.
3. Founder’s agreement provides an action plan for a situation when any one of the member quits from the company. Further, if the member the confidential information regarding the business of the company, the other members of the company have the right to take necessary action according to the terms of the agreement.
4. Founder’s agreement ensures that the intellectual property is assigned under the business name and not to an individual personally. Assignment of an intellectual property under the name of an individual will render the business less meaningful.
5. Founder’s agreement helps the company to avail the offers relating to the mergers and material transactions of the company. A good founder’s agreement provides for all the necessary action that is to be taken during mergers and sales of the company.
6. In case of closing the business, founder’s agreement provides plan for the company’s dissolution along with the distribution of share proceeds among the members of the company.
7. The most important reason of having a founder’s agreement is that it helps to have a contingency plan for cases arising out of unpredictable situations.

Why do I need a Founders Agreement in Delhi NCR

Co Founders Agreement in Delhi NCR is required for the following reasons:-

• Roles and Responsibilities

Founders Agreement clearly specifies the role and responsibilities of each member. The members are required to perform their function according to the responsibilities of the agreement. This helps to establish good business relations between the founders. 

• Avoids Ambiguity

If the roles and responsibilities of the founders are not clearly specified, then there are chances of conflicts among them with respect to share of profits, ownership etc. Founder’s agreement helps to avoid ambiguity that might arise in future with respect to the management of the company.

• Clear Objectives

A good founder’s agreement clearly lays down its objectives, strategy, business plan, exit strategy, founder departure, company dissolution etc.  Having a well defined objective of the business ensures elimination of loopholes and helps to run the business smoothly.

• Identifying Prospective Risks and Complications

Founder’s agreement helps to identify prospective risks and complications associated with the business along with the supply provisions. It clarifies any doubt related to the business and helps to establish a healthy relationship by defining the roles of the founders. Therefore, it is recommended to draft a well written founder’s agreement with the help of an expert as per the requirements of the business.

• Exit Strategy

The founder’s agreement clearly specifies the objectives, vision and exit strategy of a business. Exit strategy is necessary to avoid cases where the exit of any member from the business will lead to unbearable losses to the business.

Process of drafting a founders agreement in Delhi NCR

The primary requirement in drafting a co Founders agreement in Delhi NCR is that all the founding members of the company are required to sit and discuss the key areas of the company and to resolve all the issues on which there is a disagreement. Following processes are to be followed for drafting a co Founders agreement in Delhi NCR:-

• Find a Template

After the discussion of all the issues, it is required that the founders of the company should find a template for drafting the founders agreement. Company Vakil provides various templates which one can use and combine them.

• Fill the Particulars

Once the template is selected, the founders are required to fill the details like name of each founder, company name, and address of each founder.

• Making the provisions

The most important step is to make a detail of all the provisions to be incorporated in the founders’ agreement. The important details include compensation, roles and responsibilities of each founder, termination clause, equity ownership, intellectual property assignment etc. It is advisable that the provisions should be made with the help of an expert or legal team to avoid any loopholes.

• Reviewing of founders agreement

Once the founders agreement is drafted, it is required that one should visit a legal expert for the reviewing of the founders agreement. They will help to eliminate any loopholes in the agreement and gives professional touch to the agreement. 

• Signature of co-founders

After reviewing of the agreement by the lawyer, it is necessary to bring the agreement to all the co-founders for their acceptance. The founders agreement must be signed by each and every co-founder for it to become effective.

Minimum Requirements for Co Founders Agreement in Delhi NCR

A Founders agreement in Delhi NCR is a legal document specifying the terms and conditions for the operation of a business. It is a written agreement clearly specifying the roles and responsibilities of its founding members. The clear specification of the roles and responsibilities of the founders at the initial stage of the start-up will help the business to avoid conflicts with respect to the share of profits, company proceeds etc. Founders agreement helps to identify prospective risks and complications associated with the business along with the supply provisions. It clarifies any doubt related to the business and helps to establish a healthy relationship by defining the roles of the founders.

A good founder’s agreement include

1. Definition of the business
2. Roles and Responsibilities of each of the co-founders
3. Ownership details
4. Details of capital raised by the founders and investors
5. Exit strategy
6. Company dissolution
7. Dispute resolution
8. Salary drawn by each of the co-founders
9. Some miscellaneous provisions like intellectual property rights, non-compete clauses etc.