Co-Founders' Agreement

This Agreement is entered into between the founders of a company, wherein the relationship between the co founders are agreed upon. You need it when you are about to start a venture and need to define the ownership, roles and responsibilities of every co-founder, decision making powers, procedure as to admitting of a new partner, circumstances in which a founder can be disqualified, conflict resolution method among them, non compete clause, compensation or salary that the founders will draw. The repayment of loan from founders to keep the business running, and authority within the company to enter into contracts or sign cheques are also clearly defined,thus it prevents any disputes between the co founders.

This document can be made legally enforceable by printing it on non- judicial Stamp paper duly signed by the concerned parties with the appropriate stamp duty varying with different states. Use this agreement if You want to start any business with other founders. You want to define the roles and responsibilities of every founder. You want to avoid confusion for effective decision making.

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Frequently Asked Questions

This Agreement is entered into between the founders of a company, wherein the relationship between the co founders are agreed upon. You need it when you are about to start a venture and need to define the ownership, roles and responsibilities of every co-founder, decision making powers, procedure as to admitting of a new partner, circumstances in which a founder can be disqualified, conflict resolution method among them, non compete clause, compensation or salary that the founders will draw. The repayment of loan from founders to keep the business running, and authority within the company to enter into contracts or sign cheques are also clearly defined,thus it prevents any disputes between the co founders.
Who needs this agreement and why?
This document can be made legally enforceable by printing it on non- judicial Stamp paper duly signed by the concerned parties with the appropriate stamp duty varying with different states. Use this agreement if You want to start any business with other founders. You want to define the roles and responsibilities of every founder. You want to avoid confusion for effective decision making.
What is the use of Annexure?
The following are all the major clauses included in this agreement:
  1. Definitions and Interpretation-includes the meaning of various definitions used in this agreement.
  2. Purpose and Object-this clause tells about the scope of this agreement.
  3. Roles and Responsibilities of the promoters-this clause enumerates the roles and responsibilities of the promoters.
  4. Hour of Work and Leave Entitlement-this clause tells about the hours of work each promoter would dedicate and the leaves which the promoters can avail as per the leave policy of the company.
  5. Ownership Structure and Vesting-this clause contains the number of shares each promoter is holding.
  6. Business of the Company-this clause contains that Promoters shall (so long as they hold shares in the Company) use their best endeavours to promote and develop the Business of the Company to the best advantage.
  7. Management of the Company-this clause states that unless otherwise agreed between the Parties, the Board shall consist of Promoters themselves.
  8. Intellectual property ownership-This clause contains that each Promoter shall irrevocably assign to the Company all right, title, and interest in and to all Intellectual Properties owned by such Promoter.
  9. Representations and warranties-this clause contains that each of the Promoters represent and warrant to each other.
  10. Term and Termination-this clause includes the commencement date,term and grounds of termination of this agreement.
  11. Confidentiality-This clause states that the confidentiality of the Company should be maintained by all the Promoters.
  12. Additional Co-founders-this clause talks about the addition of a co-founder in the Company.
  13. Dispute resolution-this clause atates that in the event of any dipute arising between the promoters, the Parties shall meet to arrive at an amicable resolution thereof.And that this Agreement shall be governed by and construed in accordance with the laws of India.
These are a few terms which might be useful to read about for a better understanding of this agreement:
  1. Encumbrances-means any security interest, pledge, mortgage, lien, charge, encumbrance, adverse claim, pre-emptive right, attachment, restrain and / or any restriction of any kind including without limitation, any restriction on the use, transfer, receipt of income or other attributes of ownership.
  2. Fair Market Value-means value computed by an accounting firm or a chartered accountant mutually agreed upon between the Promoters.
  3. Memorandum-means the Memorandum of Association of the Company.
  4. Waiver- the voluntary surrender of any right or claim by a party.
  5. Severability-it means that If any provision of this Agreement is held invalid, void, or unenforceable under any applicable statute or rule of law, it shall to that extent be deemed omitted, and the balance of this Agreement shall be enforceable in accordance with its terms.
What are the legal jargons used in this agreement?
There is no Annexure section in this agreement.
How to use this agreement?
The following are all the major clauses included in this agreement:
  1. Definitions and Interpretation-includes the meaning of various definitions used in this agreement.
  2. Purpose and Object-this clause tells about the scope of this agreement.
  3. Roles and Responsibilities of the promoters-this clause enumerates the roles and responsibilities of the promoters.
  4. Hour of Work and Leave Entitlement-this clause tells about the hours of work each promoter would dedicate and the leaves which the promoters can avail as per the leave policy of the company.
  5. Ownership Structure and Vesting-this clause contains the number of shares each promoter is holding.
  6. Business of the Company-this clause contains that Promoters shall (so long as they hold shares in the Company) use their best endeavours to promote and develop the Business of the Company to the best advantage.
  7. Management of the Company-this clause states that unless otherwise agreed between the Parties, the Board shall consist of Promoters themselves.
  8. Intellectual property ownership-This clause contains that each Promoter shall irrevocably assign to the Company all right, title, and interest in and to all Intellectual Properties owned by such Promoter.
  9. Representations and warranties-this clause contains that each of the Promoters represent and warrant to each other.
  10. Term and Termination-this clause includes the commencement date,term and grounds of termination of this agreement.
  11. Confidentiality-This clause states that the confidentiality of the Company should be maintained by all the Promoters.
  12. Additional Co-founders-this clause talks about the addition of a co-founder in the Company.
  13. Dispute resolution-this clause atates that in the event of any dipute arising between the promoters, the Parties shall meet to arrive at an amicable resolution thereof.And that this Agreement shall be governed by and construed in accordance with the laws of India.

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