# Founders' Agreement Outline: [Company name]

> An outline for co-founders to agree, in writing and early, the terms
> that most often break founding teams: roles and decision rights, time
> commitment, the equity split, vesting, assignment of intellectual
> property, confidentiality, what happens when a founder leaves, and how
> disputes are resolved. It is a discussion and term-capture format: the
> agreed points are then put into binding documents (shareholders'
> agreement, articles or bylaws, restricted stock or share subscription
> agreements, IP assignment and employment or service contracts) by a
> lawyer in the company's country. Replace every `[bracketed]` value and
> every row marked *Example*. The example is fictional. This is a
> documentation format, not legal or tax advice; check the current
> official text and a qualified professional.

<!-- Guidance: How to use this template
- Each founder fills the template alone first, then you compare answers.
  The differences are the conversation you need to have.
- Agree the principles here, then ask a lawyer to draft the binding
  documents. An outline signed by founders may itself be enforceable in
  some places, so say in section 12 whether it is binding.
- Do it before incorporation or the first outside money. Terms agreed
  after a dispute starts are much harder to reach.
- The example uses Verrowind (fictional), founded by two people, with
  10,000,000 founder shares and vesting starting 2026-09-01.
-->

## Document control

<!-- Guidance: Every founder is an approver. Keep superseded versions; they show what was agreed when. -->

| Field | Value |
|---|---|
| Document ID | [FND-AGR-NNN] |
| Version | [0.1] |
| Status | [Draft / Agreed in principle / Superseded by signed documents] |
| Owner | [@founder-a] |
| Approvers | [@founder-a], [@founder-b] |
| Last updated | YYYY-MM-DD |
| Classification | Strictly confidential, founders and counsel |
| Company | [Legal name, country of incorporation, company number, or "to be incorporated"] |
| Counsel | [Law firm, or "not yet appointed"] |

### Revision history

| Version | Date | Author | Change |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@founder-a] | *Example:* First answers from both founders merged |
| 0.2 | YYYY-MM-DD | [@founder-b] | *Example:* Equity split agreed after second discussion |

## 1. Parties and purpose

<!-- Guidance: Name every founder and say what the company does. If someone contributed early but is not a founder (an advisor, an early contractor), say how they are treated so expectations are clear. -->

| Founder | Role | Date joined | Contribution so far |
|---|---|---|---|
| [Founder A] | [CEO] | YYYY-MM-DD | [Idea, customer research, cash] |
| [Founder B] | [CTO] | YYYY-MM-DD | [Prototype code, design] |

Purpose of the company: [one sentence].

## 2. Roles, responsibilities and decision rights

<!-- Guidance: Split responsibility by area and say who decides what. Founders who "decide everything together" stall on the first hard choice. Name the decisions that need both founders. -->

| Area | Owner | Decides alone up to | Needs all founders |
|---|---|---|---|
| Product and engineering *(Example)* | Founder B | Roadmap within agreed budget | Change of product strategy |
| Sales, fundraising, finance *(Example)* | Founder A | Spend up to [amount] | New funding round, debt |
| Hiring *(Example)* | Area owner | Hires within the approved hiring plan | Any executive hire, firing a founder-level role |

Deadlock: if the founders cannot agree on a decision that needs all of
them, [the CEO decides after a 7-day cooling-off period / an agreed
advisor mediates / the board decides once formed].

## 3. Time commitment and other activities

<!-- Guidance: State full-time or part-time and from when. Disclose other jobs, companies, board seats and side projects now. -->

| Founder | Commitment | From | Other activities disclosed |
|---|---|---|---|
| [Founder A] | [Full-time] | YYYY-MM-DD | [None] |
| [Founder B] | [Part-time until funding, then full-time] | YYYY-MM-DD | [Advisor to an unrelated company] |

## 4. Equity split

<!-- Guidance: Record the split and the reasons. Agree it on future contribution as well as past work. An equal split is common but not automatic; the pitfall is a split nobody explains, which feels unfair two years later. -->

| Founder | Shares | Percentage | Reasons |
|---|---|---|---|
| Founder A *(Example)* | 5,200,000 | 52% | Original idea, full-time from day one, leads fundraising |
| Founder B *(Example)* | 4,800,000 | 48% | Built the prototype, full-time from funding |
| **Total founder shares** | **10,000,000** | **100%** | |

Share price paid by founders: [nominal value per share]. Option pool
planned before the first priced round: [percentage]. See
`mba/mba-venture-finance-cap-table-card` for dilution arithmetic.

## 5. Vesting

<!-- Guidance: Vesting protects the founders from each other: a founder who leaves early does not keep a share earned by those who stay. Four years with a one-year cliff is common practice, not a legal requirement. Decide what counts as the vesting start date. -->

| Term | Agreed value |
|---|---|
| Vesting start date | [YYYY-MM-DD, often the date full-time work started] |
| Total period | [48 months] |
| Cliff | [12 months, 25% vests at the cliff] |
| After the cliff | [Monthly in equal instalments] |
| Credit for past work | [Months credited, if any] |
| Acceleration on sale of the company | [None / single trigger: on sale / double trigger: on sale and termination without cause within [12] months] |

*Example:* Founder B holds 4,800,000 shares vesting from 2026-09-01.
Nothing vests before 2027-09-01, when 1,200,000 shares vest (25%);
after that 100,000 shares vest each month. On 2028-03-01, 18 months
in, 1,800,000 shares (37.5%) have vested and 3,000,000 remain unvested.
All 4,800,000 have vested on 2030-09-01.

Tax elections: when founders receive shares that are subject to
vesting or other restrictions, some countries offer an election that
changes when and how the shares are taxed, with a short deadline. Two
dated examples, checked 2026-10-30:

- US: an election under Internal Revenue Code section 83(b) must be
  filed no later than 30 days after the date the property is
  transferred. The IRS publishes Form 15620 "Section 83(b) Election"
  (Rev. 4-2025) for this: https://www.irs.gov/pub/irs-pdf/f15620.pdf
- UK: a joint election by employer and employee under section 431 of
  the Income Tax (Earnings and Pensions) Act 2003 for restricted
  securities must be made within 14 days of acquisition (HMRC
  Employment Related Securities Manual ERSM30450:
  https://www.gov.uk/hmrc-internal-manuals/employment-related-securities/ersm30450).

Ask a tax adviser whether an election applies and who files it.

## 6. Intellectual property

<!-- Guidance: Everything the company needs to own must be assigned to it, including work done before incorporation. Investors check this in diligence (see `startup/data-room-index`). List anything a founder keeps. -->

- All IP created by a founder for the company, before or after
  incorporation, is assigned to the company: [yes / exceptions].
- Prior inventions and code each founder keeps, and any licence granted
  to the company: [list].
- Open-source and third-party code used in the product is tracked in
  [register].
- Questions: Did any founder create relevant work while employed
  elsewhere, and does that employer's contract claim it? Does any
  university or grant funder have rights?

## 7. Confidentiality and restrictions

<!-- Guidance: Restrictions on competing or soliciting after a founder leaves are treated very differently by country and state, and some are unenforceable. Record the intent and let counsel set what is lawful. -->

| Topic | Intent |
|---|---|
| Confidentiality | [Company information stays confidential during and after involvement] |
| Non-solicitation of staff and customers | [Period, subject to local law] |
| Non-competition | [Only where lawful; counsel to confirm] |

## 8. Compensation and expenses

<!-- Guidance: Agree when founders start drawing salary and at what level, and how expenses paid personally are repaid. Money founders lend or invest should be documented separately. -->

| Item | Agreed |
|---|---|
| Founder salaries | *Example:* None until funding; 90,000 USD each from January 2027 (see `startup/hiring-plan`) |
| Founder loans or cash invested | [Amount, documented as a loan or shares] |
| Expenses | [Approval and reimbursement rule] |

## 9. When a founder leaves

<!-- Guidance: Decide before anyone leaves. Define "good leaver" and "bad leaver" with examples, and what happens to vested and unvested shares in each case. Avoid vague definitions such as "for cause" without saying what it includes. -->

| Leaver type | Definition | Unvested shares | Vested shares |
|---|---|---|---|
| Good leaver | [Death, long illness, dismissal without cause, other agreed cases] | [Company may buy back at the lower of cost and fair value] | [Founder keeps, or company may buy back at fair value] |
| Bad leaver | [Resignation within [x] months, material breach, defined misconduct] | [Company may buy back at the lower of cost and fair value] | [Founder keeps / buy back at a discount, subject to local law] |

Other leaving terms: return of company property, handover period, board
seat and director resignation, transfer of domain names and accounts.

## 10. Share transfers and future rounds

<!-- Guidance: Capture the founders' intent on transfers; the shareholders' agreement will set the mechanics. -->

- Transfers by a founder need [consent of the other founders / board].
- Right of first refusal for the company or other founders: [yes / no].
- Drag-along and tag-along on a sale: [principles].
- Founders' approach to raising: [instrument, target, timing; see
  `startup/fundraising-tracker`].

## 11. Disputes

<!-- Guidance: A staged process (talk, mediate, then decide) keeps most disagreements out of court. -->

1. Founders discuss within [7] days of a written notice.
2. If unresolved, mediation by [named person or body] within [30] days.
3. If still unresolved, [arbitration / courts of the country of
   incorporation].

## 12. Status and next steps

<!-- Guidance: Say whether this outline is binding, and list the documents counsel will draft, with owners and dates. -->

| Next step | Owner | Due |
|---|---|---|
| Decide whether this outline is binding: [Not binding, intent only] | All founders | YYYY-MM-DD |
| Incorporate and issue founder shares with vesting | Counsel | YYYY-MM-DD |
| Sign IP assignment and service or employment agreements | Counsel | YYYY-MM-DD |
| File any tax election within its deadline | Each founder, with adviser | [Within 30 days in the US, 14 days in the UK, check others] |

Signatures of founders (if signing): [Founder A, date], [Founder B, date].

## Standard and licence note

Based on common startup practice for founder arrangements, with dated
US and UK tax election examples from the IRS and HMRC pages cited. All
wording and the example are original and fictional; no law firm form
is reproduced. Laws on vesting, leaver terms, restrictive covenants and
tax differ by country and change: check the current official text and
ask a qualified lawyer and tax adviser. This is a documentation format,
not legal or tax advice. Template licence: MIT.