Co-founder Agreement Lawyers Perth

Things That Need To Be Included In A Co-founder Agreement:

• Distribution of ownership clause – It evaluates the distribution of equity among the founders at the start of the business. It is based on several aspects like the capital invested by each founder, connections in the target market, and experience. It prevents the rise of disputes in the future regarding the ownership status of the founders.
• Provisions regarding the exit of a co-founder – The agreement must contain provisions for the situation when a co-founder resigns or is terminated from the company. It also includes the details regarding the distribution of the former founder’s shares among the remaining ones.
• Roles and responsibilities – It is important to assign the roles and responsibilities of the co-founders beforehand. It also includes the list of departments headed by the founders like marketing or administration.
• Value addition by the co-founders – The founders add value to the firm in the form of intellectual work, technical knowledge, or strong marketing leads. There must be an agreement between the co-founders regarding these additions and the equity gained in return. It helps in maintaining transparency between the founders.
• Decision-making powers – While running a business, there is a need to make difficult decisions. The structure of decision making in a company decides its future. The agreement consists of the board structure and the hierarchy of decision-making abilities.
• Source of finance – Apart from the initial capital contributed by the founders, the business will need a steady source of finance to function on a day-to-day basis. It is essential to decide the distribution of finances among the founders to prevent a financial standstill in the future.
• Clause of Confidentiality – The co-founders must enter a confidentiality clause in the agreement to prevent any leaks of sensitive information or trade secrets. It restricts the founders from sharing sensitive information acquired through the company to any external source as such sharing might cause harm to the business.