What is Co-Founders’ Agreement?
Document addressing relationship among startup founders by defining their rights and responsibilities.
Originally published here.
Why is Co-Founders’ Agreement required?
To avoid legal pitfalls during early stages of startup and ensure proper understanding between cofounders, thereby reducing risk of disputes and misunderstandings.
Key Clauses of CoFounders Agreement
- Roles and responsibilities
- Shareholding pattern, Vesting & Lock-in period
- Future Stock Options
- Issuance of new shares
- Transfer of shares – restrictions and procedure
- Decision making process for startup operations
- Possible exit strategy for each cofounder or shareholder
Drafting Cofounders Agreement
- A general list of understanding between startup founders is prerequisite before drafting agreement.
- Noting main points on company’s letterhead can be a good start.
- Engaging startup company lawyer to formally draft the agreement is strongly advisable.
Rahul Dev, Partner at the law firm of Tech Corp Legal LLP, is a patent attorney and international technology business lawyer. Dev’s corporate law practice is aimed at integrating patents, technology laws, intellectual property rights, regulatory and security laws to provide services to Tech companies.
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