Cofounder Agreement Template

Custom Made Cofounder Agreement Template

This co-founder agreement is a binding legal document that provides for the rights, liabilities, roles, responsibilities, and obligations of co-founders. It outlines the ownership structure between the founders; their initial capital and non-capital contributions; and also makes provisions for methods of dispute resolution.

The cofounder agreement is entered into by the founders or creators of a startup or technology business. It is a necessity for anyone looking to build a business and it is always advisable to have this agreement at the start of a business relationship.

It is important to have a cofounder agreement regardless of whether the founders of a company (CEO, CTO, COO, etc.) have individual employment contracts with the company. This is because the individual contracts provide for their responsibilities to the company, whereas the cofounder agreement governs the relationship between the founders as a collective and the company and establishes that all founders are in agreement about the business of the company.

Preview Cofounder Agreement Contract

About The CoFounder Agreement Template

This cofounder agreement template has been carefully vetted by lawyers with qualifications in multiple jurisdictions across Africa and the United States of America, with extensive experience working with some of the fastest-growing technology companies in Africa.

It is written in simple, comprehensive grammar that is easy to understand by founders and entrepreneurs. However, we recommend a legal review with our lawyers before signing this agreement to ensure that it covers your unique business needs.

Why You Need This Custom Made CoFounder Template

This cofounder agreement template Provides clarity for founders on each person’s responsibility and obligation.
Helps co-founders decide the ownership of shares and how the shares they own in the company will vest over time.
Ensures that any intellectual property created by the founder for business purposes is owned by the business and not the individual founders.
Having a cofounder agreement early on is also a positive signal to investors that the business is committed to structure and good corporate governance.

This CoFounder Agreement Contract Contains:

Cofounders Information:

List the names of the cofounders and their addresses as well as the effective date on which the agreement is entered into by the parties.

Duties and Responsibilities:

Clearly state the roles and responsibilities of each cofounder. This will help to ensure that each person understands what is expected of them in the partnership.

Business Information:

You should clearly state the name and location of your business, as well as define the type of business you will be engaged in and the industry in which your business will operate. This is to ensure that everyone is on the same page with regard to the business.

The Shareholding and Ownership Structure:

The clause outlines each founder’s shareholding and percentage, as well as states if any vesting schedule will apply to share ownership. It should provide for the number and percentage of shares for each founder and the period over which these shares will vest.

A Vesting Schedule:

A vesting schedule is a period over which a founder “earns” their stock in the company over a period of time depending on commitment and performance. It is set up by the company to incentivize founders to stay for a period of time but also to protect the company’s interests in case a founder leaves.

Capital Contribution:

This contribution may be in cash or kind, but is important to ensure fairness in each person’s contribution to the growth of the company.

Confidentiality:

The parties to the agreement must consent not to disclose any sensitive, or confidential information (trade secrets) belonging to the business to unauthorized third parties.

Dispute resolution:

The agreement provides the various methods of resolution available to the founders in the instance of any dispute or misunderstanding which cannot be resolved amicably.

Termination:

This agreement provides for instances in the future where this agreement may be brought to an end. This is to ensure that the death of a cofounder or a disagreement does not mean the end of the business, except if certain conditions are adhered to.

CoFounder Agreement Contract FAQ

Who should be the signatories?
When does it become operational?
Does it require board approval?
Does it require additional legal review?
Does it need to be renewed?
How can it be canceled?

All the cofounders in the company.

Cofounder agreements become operational from the date of commencement provided at the top of the agreement. The date of commencement is agreed on by the cofounders. This can sometimes be retrospective if the agreement is signed after the business is already in operation, although it is strongly recommended that this is the first step taken once the parties agree to start a company.

No, this document does not require the approval of the company’s Board of Directors. It is usually entered into before the existence of the company.

These templates are suggested templates that are created using terms that are simple to understand by anyone. They are a good place to start when entering into a binding contract or agreement. However, this document is not a substitute for legal advice and we recommend that you consult a lawyer before signing legal documents or agreements or seeking legal advice to ensure you are complying with applicable laws and regulations.

The cofounder agreement does not need to be renewed.

This agreement can be cancelled by the termination, resignation or death of a co-founder.