A founders’ agreement is a legally binding document that outlines the roles, responsibilities, rights, and obligations of the founders of a startup company. It is an essential tool for ensuring that all co-founders are on the same page and that potential disputes and issues are addressed proactively. Here are some key elements typically included in a founders’ agreement:

Ownership Equity: This section defines how ownership (equity) in the company will be distributed among the founders. It specifies the initial ownership percentages and how these may change over time due to factors like additional investment, vesting, or the introduction of new founders.
Roles and Responsibilities: The agreement should clearly outline the roles and responsibilities of each founder within the company. This helps prevent conflicts and ensures that everyone understands their specific duties and contributions.
Decision-Making: It should specify how major decisions will be made within the company, such as those related to product development, financing, hiring, and partnerships. This might include details on voting rights and procedures.
Vesting: Vesting schedules for founders’ equity are often included to encourage long-term commitment. Vesting means that founders earn their ownership stake gradually over time, typically over a period of several years.
Transfer of Ownership: The agreement should address what happens if a founder wants to leave the company voluntarily (e.g., resignation) or involuntarily (e.g., termination). It may include clauses related to the purchase of departing founders’ shares.