What terms should we include in our co-founder agreement?


We are a group of university graduates based in London. We want to start a company that will commercialize products based on engineering work we have done together. None of the co-founders has a legal background, but we would like to draw up an agreement that sets out everybody's obligations and share in the company. How should we do this and what are essential terms that we can't afford leave out?


Answers: 1 public & 0 private

IP Consultant

Hi, instead of Co-founder agreement go for shareholder agreement that you will be needed. A founder shareholders’ agreement is a private contract subscribed voluntarily between all shareholders of a company with the aim of regulating their relationships, rights and obligations, as well as the daily operations of the company. The content of shareholders’ agreements will depend on the type of project or company is regulating. It can cover various issues, from day-to-day operations, organization processes, business activities and relationships between the shareholders. It is important to note that shareholders’ agreements are independent contracts, which means that they are a different type of document that can co-exist with the articles of association of a company.

The way to achieve this goal is to reach an agreement that will have to be included in a legal document that will be binding for all parties. It is strongly recommended to look for specialized advice regarding shareholders’ agreements. Everyone involved in the company needs to understand what they are agreeing to, so there can’t be any misunderstandings in the future. It is essential to receive advice from an expert lawyer on these matters.

Shareholders’ agreement cover uncertainty like

• What if a founder leaves the company?
• What if a founder starts another similar project?

• What if we need a new partner?
• What if a founder is not dedicating enough time or finds another job?
• What if a founder is not delivering what he/she was supposed to do?
• What if there are disagreements between the shareholders?
• What if there’s a deadlock situation?

For all of these questions and for many others, the shareholders’ agreement should be used as a guide that would tell us how to act and what the consequences would be in these situations. Therefore, not having a shareholders’ agreement would increase the legal uncertainty for both the shareholders and the company itself.

let us know if we can help you can write us on nass@ipforstartup.com

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