Document

Founders’ Agreement

Updated on: Oct 12th, 2021

|

5 min read

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.

Mainly, an agreement is made at the time of the incorporation to avoid ambiguity that may arise in the enterprise in future. It also sets up the expectations and goals of all the co-founders by assigning each of them a specific role and responsibility towards the betterment of the enterprise.

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.,)

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.

For better understanding, read more related articles

inline CTA
Get an expert at affordable price
For ITR, GST returns, Company Registration, Trademark Registration, GST Registration

Public Discussion

Get involved!

Share your thoughts!

summary-logo

Quick Summary

A Founders’ Agreement is a contract signed between co-founders stating responsibilities, ownership, and investments. It is advised to make it at the incorporation stage to avoid ambiguity and set expectations. Essentials include business definition, capital and ownership details, roles, compensation, exit formalities, dissolution, dispute resolution, and more. Legal team help is recommended to draft a thorough agreement.

Was this summary helpful?
liked-feedbackliked-feedback

Clear offers taxation & financial solutions to individuals, businesses, organizations & chartered accountants in India. Clear serves 1.5+ Million happy customers, 20000+ CAs & tax experts & 10000+ businesses across India.

Efiling Income Tax Returns(ITR) is made easy with Clear platform. Just upload your form 16, claim your deductions and get your acknowledgment number online. You can efile income tax return on your income from salary, house property, capital gains, business & profession and income from other sources. Further you can also file TDS returns, generate Form-16, use our Tax Calculator software, claim HRA, check refund status and generate rent receipts for Income Tax Filing.

CAs, experts and businesses can get GST ready with Clear GST software & certification course. Our GST Software helps CAs, tax experts & business to manage returns & invoices in an easy manner. Our Goods & Services Tax course includes tutorial videos, guides and expert assistance to help you in mastering Goods and Services Tax. Clear can also help you in getting your business registered for Goods & Services Tax Law.

Save taxes with Clear by investing in tax saving mutual funds (ELSS) online. Our experts suggest the best funds and you can get high returns by investing directly or through SIP. Download Black by ClearTax App to file returns from your mobile phone.

Cleartax is a product by Defmacro Software Pvt. Ltd.

Company PolicyTerms of use

ISO

ISO 27001

Data Center

SSL

SSL Certified Site

128-bit encryption