What is a Founders’ Agreement?

A Founders’ Agreement describes the relationship among the founders of a new company. Typical language would include: What services will the founders provide to the company? Will they work full time or part time? Will they be paid as employees or only receive equity? How may shares will each founder receive? When will s/he receive the shares – upfront or according to a vesting schedule? What happens to the technology developed by each founder? Who owns it: the company or the founder? Can a founder start a competing or similar company? The agreement should begin a discussion about how the...

Read more →

What is a Shareholder Agreement?

A shareholder agreement is an agreement between a company’s owners that sets out the rights and obligations of the company’s owners. A shareholder agreement will generally set forth: How and when a shareholder can sell his/her shares. What decisions require unanimous consent of the shareholders. Can a shareholder start another business that competes with the company? How and when the company can borrow money from the shareholders. How disputes will be resolved. The process of negotiating a shareholder agreement enables you to have a frank discussion about real-life topics that might only come up if there is a dispute. It...

Read more →