Frequently Asked Questions
The proportion of ownership each founder or co-founder will own after the company adopts a more formal structure (such as a Partnership firm, LLP, or Company), is the most crucial element of a business. This is by far the most crucial phrase and requires careful consideration because it will be the subject of the bulk of future disagreements between the founders.
The stake might be distributed among the members using a variety of techniques. These may be roughly categorised into three groups.
A) Equal division: If the business’s founders determine that they each contributed equally to the venture, they can simply choose for an equal ownership.
B) Division based on effort: Frequently, not all the founders or co-founders are putting up equal amounts of work on behalf of the company. Perhaps just one or a small number of them are working on the essential duties, while others are completing non-essential ones. As a result, there can be a split based on efforts.
C) Division on the basis of capital contribution: The parties’ respective contributions of capital, such as cash or cash equivalents, may also be divided.
D) Combination of the aforementioned factors: As an alternative, the stakes may be divided according to the amount of work and capital that each partner has provided.
Yes, in order for the Founder’s Agreement to be enforceable in court, it must be signed on non-judicial stamp paper for the appropriate amount and notarized by a notary.
When you and your co-founders decide to begin developing a company strategy, it is the ideal moment to engage into a founder’s agreement.