A founders shareholder agreement is a crucial legal document that outlines the terms and conditions governing the relationship between the founders of a company. It serves as a blueprint for the company’s operations, ensuring transparency, fairness, and protection for all parties involved. To create a professional and effective template, consider the following essential elements:
1. Company Information
Name: Clearly state the full legal name of the company.
Jurisdiction: Specify the state or country where the company is incorporated.
Date of Incorporation: Indicate the exact date the company was formed.
2. Parties Involved
Founder Names: List the full names of all founders participating in the agreement.
Founder Roles: Define the specific roles and responsibilities each founder will assume within the company.
3. Share Ownership
Initial Allocation: Determine the percentage of ownership each founder will receive at the outset.
Vesting Schedule: Establish a vesting schedule to ensure founders remain committed to the company.
Transfer Restrictions: Outline any limitations on the transfer of shares, such as right of first refusal or buyback provisions.
4. Voting Rights
Voting Structure: Specify how votes will be allocated based on share ownership.
Special Voting Rights: If applicable, define any special voting rights for certain founders or classes of shares.
5. Board of Directors
Composition: Determine the size of the board and how members will be appointed.
Powers and Responsibilities: Outline the board’s authority and duties.
6. Management Structure
Executive Officers: Identify the key executive positions and how they will be filled.
Compensation: Address the compensation structure for officers and employees.
7. Intellectual Property
Ownership: Clarify who owns intellectual property created by founders or employees.
Assignment: Ensure that all intellectual property rights are assigned to the company.
8. Dispute Resolution
Mediation or Arbitration: Specify a preferred method for resolving disputes.
Governing Law: Indicate the applicable law for interpreting and enforcing the agreement.
9. Financing
Capital Contributions: Outline the initial capital contributions from each founder.
Future Funding: Address how future funding rounds will be conducted.
10. Exit Strategy
Buyback or Redemption: Define procedures for buying back or redeeming shares.
Mergers and Acquisitions: Address how the company will be sold or merged.
11. Termination
Causes for Termination: Specify grounds for terminating the agreement.
Consequences of Termination: Outline the effects of termination on the company and its founders.
12. Miscellaneous Provisions
Entire Agreement: State that the agreement constitutes the entire understanding between the parties.
Severability: Ensure that if any provision becomes unenforceable, the remaining provisions will remain valid.
Amendments: Establish procedures for modifying the agreement.
13. Signatures
Founder Signatures: Obtain the signatures of all founders to indicate their agreement to the terms.
Design Considerations for Professionalism and Trust:
Clear and Concise Language: Use plain language that is easy to understand. Avoid legal jargon whenever possible.
Consistent Formatting: Maintain consistent formatting throughout the document, using headings, bullet points, and numbering to enhance readability.
Professional Layout: Use a clean and professional layout with ample white space and easy-to-read fonts.
Legal Review: Consult with an attorney to ensure the agreement complies with applicable laws and protects your interests.
By carefully addressing these elements and incorporating professional design principles, you can create a founders shareholder agreement template that provides a solid foundation for your company’s success.