The Tax Publishers

Start Up--Founders Agreement

Key Deliberations in Startup Founders' Agreement

FCS. Jaya Sharma-Singhania/CS. Mehul Solanki

While a lot of startups might be focused on the business and not on legal matters, it's essential to realize just how much legal considerations will impact your startup's future. Let's have a look why your startup needs a founders' agreement.

1. Introduction

A Founder's Agreement is an official contract or a legal agreement executed between the co-founders of the company while setting up a business. This agreement elucidates the roles, rights and duties, responsibilities, ownership, liabilities, and investment proportion of each founder.

-- A founder's agreement should be made in the written format, not oral;

-- Two or more partners jointly can enter into the founder's agreement called co-partners/parties;

-- All co-founders will enter into the agreement exactly while incorporating the business or company.

The objective of the founder's agreement is to avoid disputes regarding business, which may arise over time between co-founders. This agreement apparently set out the strategy of the founders, who should act within the ambit and should follow the mandatory provisions laid on.

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