LEGAL YUKTI

A Founders’ Agreement is an official contract that is signed between all the co-founders of a firm. This document states all the responsibilities, ownership, and initial investments made by each of the founders of the company. It is advised to make a founders’ agreement at the incorporation stage of an enterprise as it will lay out the responsibilities and roles of each of the co-founders.

Now, let us look at the essentials that are a must in any founders’ agreement. They are:

Definition of the business
Details of capital raised (by founders and investors)
Ownership details (in the company)
Roles and responsibilities of each of the co-founders
Compensation (salary drawn by each of the co-founders)
Details of exit formality for founders
Dissolution of the firm
Details of dispute resolution
Miscellaneous provisions (assignment of intellectual property rights, non-compete clauses, etc.,)

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Founders’ agreement is always better to be in a written format than being an oral contract. It is also important that it is to be drafted with the help of a legal team, which ensures elimination of all the loopholes that can be exploited.

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