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Founders Equity Agreement

Founders Equity Agreement Template for India

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Key Requirements PROMPT example:

Founders Equity Agreement

"Need a Founders Equity Agreement for a technology startup with three co-founders, where two technical founders will each hold 35% equity with 4-year vesting, and one business founder will hold 30% equity with accelerated vesting due to initial capital contribution."

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Document background
The Founders Equity Agreement is a crucial legal document used when establishing a new company or formalizing relationships between existing founders in India. It becomes necessary when two or more individuals join forces to create a business venture and need to clearly define their ownership stakes, responsibilities, and rights. This agreement, governed by Indian corporate law including the Companies Act 2013, typically comes into play during company formation or early-stage operations. It includes essential provisions for equity distribution, vesting schedules, transfer restrictions, and governance mechanisms, serving as a roadmap for founder relationships and dispute resolution. The document is particularly important in the Indian startup ecosystem, where clear founder agreements are vital for future fundraising and growth opportunities.
Suggested Sections

1. Parties: Identification of all founding members and the company details

2. Background: Context of the agreement, including company formation purpose and founders' intent

3. Definitions: Definitions of key terms used throughout the agreement

4. Equity Structure: Details of initial shareholding percentages and share class specifications

5. Roles and Responsibilities: Defined roles of each founder and their primary responsibilities in the company

6. Vesting Schedule: Terms of equity vesting including timeline and conditions

7. Transfer Restrictions: Limitations on transfer of shares and right of first refusal provisions

8. Intellectual Property Rights: Assignment of IP rights to the company and protection of company IP

9. Confidentiality: Non-disclosure obligations regarding company information

10. Decision Making: Voting rights and major decision-making procedures

11. Exit Provisions: Terms governing founder exit, including good/bad leaver provisions

12. Dispute Resolution: Process for resolving disputes between founders

13. Governing Law: Specification of Indian law as governing law and jurisdiction

Optional Sections

1. Non-Compete: Restrictions on founders engaging in competing businesses, used when specific competitive concerns exist

2. Tag-Along Rights: Rights of minority founders to join in sale of shares, important for founder protection

3. Drag-Along Rights: Rights to force minority shareholders to join in sale, useful for future exit scenarios

4. Investment Commitments: Details of any promised capital contributions, used when founders are investing money

5. Founder Loans: Terms of any loans provided by founders to the company, if applicable

6. Dead-Lock Resolution: Special provisions for resolving situations where founders cannot agree, useful for 50-50 partnerships

7. Family Succession Rights: Rights regarding transfer of shares to family members, important for family-involved businesses

Suggested Schedules

1. Schedule 1: Share Capital Structure: Detailed breakdown of shareholding pattern and share classes

2. Schedule 2: Founders' Details: Complete information about founders including contact details and shareholding

3. Schedule 3: Vesting Schedule Details: Comprehensive vesting timeline and milestones

4. Schedule 4: IP Assignment Details: List of intellectual property being assigned to the company

5. Schedule 5: Reserved Matters: List of decisions requiring special majority or unanimous consent

6. Appendix A: Company Business Plan: Initial business plan and objectives

7. Appendix B: Roles and Responsibilities Matrix: Detailed matrix of founder roles, responsibilities, and reporting structures

Authors

Alex Denne

Head of Growth (Open Source Law) @ ºÚÁÏÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions
Clauses


































Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Manufacturing

Professional Services

Education Technology

Retail

Telecommunications

Media and Entertainment

Clean Technology

Biotechnology

Software Development

Consulting

Real Estate

Relevant Teams

Legal

Corporate Affairs

Executive Leadership

Board of Directors

Company Secretarial

Corporate Governance

Compliance

Finance

Strategic Planning

Relevant Roles

CEO

Co-founder

Managing Director

Chief Technology Officer

Chief Financial Officer

Chief Operating Officer

Chief Product Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Startup Founder

Entrepreneur

Business Development Director

Innovation Officer

Strategic Planning Director

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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