A founders agreement is a legal document that outlines the terms and conditions of starting a business among the founders. This document covers various issues such as the roles and responsibilities of each founder, the division of shares, the decision-making process, and the exit strategy. A sample founders agreement India provides entrepreneurs with a template to create their own personalized agreement that suits their business needs.
Here are some of the key clauses that must be included in a founders agreement.
Role and Responsibilities: The founders agreement must define the role and responsibilities of each founder. This clause will outline the duties of each founder and the scope of their responsibilities. It will also ensure that each founder is accountable for their role in the business.
Division of Shares: The founders agreement will specify the percentage of shares each founder will hold in the business. This clause is essential as it will determine the equity distribution and the voting rights of each founder.
Capital Contributions: This clause details the amount of money each founder will contribute towards the business. The clause will specify the time and manner of payment, and the consequences of default on payment.
Decision-making process: The founders agreement must outline the decision-making process for the business. It must specify the procedure for making decisions, the quorum required, and the voting rights of each founder.
Intellectual Property Rights: This clause will outline the ownership of intellectual property rights created by the business. It is crucial to specify the ownership of intellectual property rights to avoid any future disputes.
Confidentiality and Non-competition Clause: The founders agreement must contain clauses on confidentiality and non-competition. It must ensure that the founders do not disclose confidential information about the business and do not compete with the company.
Exit Strategy: This clause outlines the exit strategy of the founders in case of any unforeseen circumstances. It will specify the procedure for the sale of shares, the valuation of the company, and the circumstances under which a founder can exit the business.
In conclusion, a founders agreement is a critical document that lays the foundation for a successful business partnership. By including relevant clauses, such as those mentioned above, the agreement can help prevent disputes and protect the interests of all parties involved. A sample founders agreement India is an excellent starting point for entrepreneurs in India looking to create their own customized agreement.