A founders agreement is a legal contract between co-founders that outlines their roles, responsibilities, ownership, and investment proportion when starting a business. It’s important to have this agreement in writing rather than verbally agreed upon. All co-founders must agree to the terms when incorporating the company.

The purpose of a founders agreement is to prevent future disputes among co-founders by establishing clear guidelines and strategies for them to follow. It can also address unforeseen events, such as the death or resignation of a co-founder, which could impact the business.

Establishing the Business Entity : The founders agreement outlines the type of business entity to be established by the co-founders, setting the direction for the company

Outlining Business Plans : This agreement describes the vision, mission, and goals of the entity, which helps co-founders work towards a common goal

Designating Roles and Responsibilities : A founders agreement assigns roles and responsibilities to each co-founder, helping avoid overlapping roles and potential conflicts

Structuring Ownership : The agreement specifies the structure of ownership, outlining the percentage of equity shares held by each co-founder, which helps avoid future conflicts

Decision Making Process : The agreement provides a procedure for handling ideological conflicts between co-founders and outlines the voting system, defining the value of votes for each founder

Compensation Provisions : The agreement outlines the scheme of compensation to be made in case a co-founder violates the provisions mandated, which ensures fairness among co-founders

Expulsion of Co-founders : The agreement provides a structure for dealing with co-founders who engage in fraudulent activities and outlines the

Step 1: Prepare the Draft: Create a comprehensive draft of the founders agreement that includes all necessary fields such as company objectives, terms and conditions for co-founders.

Step 2: Review and Revise: Once the draft is complete, review it to ensure all mandatory provisions are included and there are no ambiguous clauses.

Step 3: Add Additional Information: Add any additional information or provisions that may be necessary.

Step 4: Obtain Acknowledgement: Once the final draft is complete, ensure all co-founders acknowledge and accept the agreement.

Step 5: Notarize the Agreement: Notarize the agreement on a non-judicial stamp paper to make it legally binding.

Step 6: Obtain Signatures: Obtain signatures from all co-founders on the agreement.

Step 7: Seek Expert Guidance: Before finalizing the agreement, seek expert guidance to avoid disputes and ensure all provisions are legally sound.

1. Address proof of all co-founders

2. Identity proof of all co-founders

3. Identity proof of witnesses

4. A clear objective of the company

5. The number of equity shares of each co-founder

6. The overall percentage of shares of each co-founder