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Founder Agreements
Expert legal assistance for co-founder agreements, equity split, vesting schedules, and dispute resolution clauses for startups
What is Founder Agreement?
📌 Overview
A Founder Agreement is a legally binding contract between co-founders that defines their rights, responsibilities, equity ownership, and exit terms. It is crucial for preventing disputes and ensuring smooth startup operations. HLAPL has drafted 100+ founder agreements for successful startups.
✅ Key Aspects
Equity split and share allocation, Vesting schedules (4 years with 1-year cliff), Founder roles and responsibilities, Decision-making process, IP ownership assignment, Founder exit terms (good leaver vs bad leaver), Dispute resolution mechanisms, Non-compete and confidentiality clauses.
⚖️ Legal Framework
Founder agreements are governed by the Indian Contract Act, 1872, Companies Act, 2013, and SEBI (ICDR) Regulations for listed startups. Courts recognize founder agreements as valid contracts that can be enforced.
Important FAQs
❓ What is a vesting schedule?
A vesting schedule determines when founders earn their equity over time. Typical startup vesting is 4 years with a 1-year cliff (no equity if founder leaves within first year). HLAPL helps structure vesting to protect founder interests.
❓ What is good leaver vs bad leaver?
Good leaver includes death, disability, or agreed exit - usually gets vested equity and sometimes additional compensation. Bad leaver includes breach, fraud, or voluntary resignation without cause - may forfeit unvested or even vested equity.
❓ Is founder agreement legally required?
While not legally mandatory, founder agreements are highly recommended by legal experts and investors. Without one, disputes under default company law can lead to 50:50 splits and deadlock situations.
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