A Founders’ agreement is the beginning document every new business formation should have because it serves as the bedrock of your business. The tone is set, and the groundwork laid with a founders’ agreement in place; it interacts and displays who is managing the company as a whole. While utilizing this agreement may prove unnecessary, drafting one ensures the responsibility in every position in every critical role legally and financially, should any issues arise with the business.
A few reasons to have a founders’ agreement in place may include:
- Guidance through dispute resolution
- Displays ownership roles & their responsibilities
- Description of rules surrounding contract termination
- Protection towards minority shareholders
- Establishes direction for handling dissolution
- Solidifies your business formation’s merit
Founders’ agreements are the quintessential document that provides a well-planned business venture involving more than one person. They are also often used as attractive investing tools to attract potential investors, proving that you are organized and methodical during your “bootstrapping” era. Therefore, ensuring that you have a Founders Agreement at the start of every business venture will always prove to be a beneficial move.
What is in a Founders Agreement
Like all contracts, founders’ agreements consist of standard procedures and guidelines surrounding the business. You want this basis to be implemented in all future business agreements to ensure that they are legally comprehensive. A few essential parts include:
- Non-Competition Clause
- Ownership structure
- Co-founders as managers
- Vesting schedules
- Percentage of shares distribution
- Promissory notes
- Voting rights
- Capital contribution requirements
- Roles and responsibilities
- Confidentiality
- Contractual communication
- Dispute resolution
- Choice of law clause
- Representations and warranties
You will consider several essential facets when creating a founders’ agreement. Contacting the contract attorneys at Enara Law PLLC to draft an agreement for you will ensure they are thorough and designed so that you don’t miss a single step in the planning processes in the earlier stages of your business. Contact Enara Law today, and we offer twenty-four hour-seven days a week service. Give us a call at 602-687-2010 or email us directly at [email protected].