The founders agreement: what to agree on before registering the company

Why before the commercial register, not after

A founders agreement governs the relationship between the partners of a startup before or at its formation, and sets what each founder owns, contributes, and is entitled to. Timing is the essence here: a written agreement made in a time of harmony settles in advance the questions that are hard to settle during a dispute. Before registration there are no accumulated assets and no revenues to fight over, so everyone negotiates on principle rather than on gain, and a fair arrangement is far easier to reach.

Every group starting a project together needs it, especially when contributions vary between money, time, and expertise: one founder puts in the capital, another works full time, a third brings know-how or relationships. Without a written agreement, these differences later turn into conflicting views of entitlement, the most fertile ground for a dispute.

• Partners starting a startup together with differing contributions.
• Setting equity and roles before or with formal incorporation.
• Organizing vesting and exit before any dispute occurs.

The essential clauses, one by one

These are the matters that must have a written answer in any founders agreement before signing:

• The equity split: each founder's percentage, and the basis on which those percentages were set.
• Contributions: what each founder provides in money, work, or in kind, and when a founder counts as having defaulted on their contribution.
• Roles and responsibilities: who runs what, and the limits of each founder's authority.
• The decision-making mechanism: which decisions pass by majority, and which require the founders' unanimity.
• Vesting: whether equity is earned gradually over time or upon milestones, as the next section details.
• What the founders produce: agreeing in writing that work and development created for the project belong to the project, not to whoever created them.
• Exit and transfer of equity: what happens if a founder leaves the project, and the terms for selling or transferring a stake.
• Dispute resolution: the agreed steps before a disagreement reaches a dead end.

The smart-fill in template F-01 asks about the founders, the equity split, each founder's contribution, roles, the decision-making mechanism, the vesting schedule, and the exit terms, then drafts your agreement into coherent, clear clauses.

Vesting: the protection most founders overlook

Vesting means a founder earns their equity gradually over time or upon meeting milestones, rather than owning it fully at once. Its importance is that it protects the project if a founder leaves early, so they do not keep a large stake without continuing contribution while the others keep building for years. The absence of this clause is the most recurrent source of bitterness among the founders who stay: a partner who left after months still owns a quarter of the company.

There is no single correct vesting schedule; what matters is that the schedule reflects the nature of your team's contributions and that it is written down with defined periods and milestones. Template F-01 lets you set the vesting schedule to fit your agreement.

From the founders agreement to the articles and the shareholders agreement

A founders agreement governs the personal relationship between the partners and details such as vesting, roles, and exit, and it often precedes incorporation. The articles of association are the statutory document by which the company is officially registered. The two are complementary, not competing, and it is advisable that the founders agreement align with the articles when they are prepared, so the two documents never carry different texts on the same matter.

After the limited liability company is incorporated and the partnership settles, the relationship usually moves to a broader shareholders agreement governing ongoing governance. Sighaty template F-02 covers that stage, and the LLC shareholders agreement guide in the related guides below explains it in detail.

Common mistakes before signing

• Postponing the agreement until after registration, then discovering each party negotiates from their own interest once the project has grown.
• Splitting equity equally by default without an honest discussion of each founder's actual contribution.
• Omitting vesting, so an early leaver keeps their full stake with no continuing contribution.
• Relying on verbal understandings or scattered messages that are hard to prove at the first real test.
• Using a free template copied from a different legal environment that ignores vesting and exit or later conflicts with the articles of association.

Frequently asked questions