Founders Agreement Template for England and Wales

A Founders Agreement is a legal contract that sets out how co-founders will run their business together. It covers crucial details like ownership stakes, roles and responsibilities, decision-making powers, and what happens if someone wants to leave the venture. Think of it as the ground rules that keep everyone aligned from day one.

Under English law, while not legally required, this agreement helps prevent costly disputes by clarifying intellectual property rights, profit sharing, and exit procedures. Most UK startups create one before seeking investment or when registering their company, as it shows potential investors they've thought through key governance issues and have a solid foundation for growth.

Create a Founders Agreement right when you start working with co-founders on a new business venture - ideally before you register your company or begin operations. This timing helps prevent misunderstandings about crucial issues like equity splits, decision-making authority, and intellectual property ownership while everyone is still enthusiastic and aligned.

The agreement becomes especially important when bringing on new co-founders, seeking external investment, or planning major business changes. Many UK investors and accelerators require seeing a signed Founders Agreement before engaging seriously with startups, as it demonstrates the team has addressed potential conflict points and established clear governance structures.

• Founder Stock Purchase Agreement: Focuses specifically on share allocation and purchase terms between founders and the company
• Startup Equity Agreement: Details equity distribution, vesting schedules, and shareholder rights
• Founders Collaboration Agreement: Outlines working relationships and project contributions during early startup phases
• Co Founder Vesting Agreement: Structures gradual equity earning based on time commitment and milestones
• Founders Service Agreement: Defines roles, responsibilities, and compensation for active founders

• Co-Founders: The primary parties who create, sign, and are bound by the Founders Agreement, typically including all individuals starting the business together
• Company Solicitors: Draft and review the agreement to ensure legal compliance and protect all parties' interests under English law
• Investors: Often review these agreements during due diligence to understand the founding team's structure and commitments
• Company Secretary: Maintains the agreement as part of official company records and ensures ongoing compliance
• Board Members: Reference the agreement when making decisions about founder-related matters or disputes

• Core Details: Gather full legal names, addresses, and roles of all co-founders, plus company registration details if already incorporated
• Equity Structure: Define exact ownership percentages, vesting schedules, and any special share classes or rights
• Contributions: Document what each founder brings (money, assets, IP, expertise) and future commitments
• Key Decisions: Agree on voting rights, management roles, and decision-making thresholds
• Exit Planning: Outline procedures for founder departures, share transfers, and company sale scenarios
• Draft Review: Our platform generates precise, compliant agreements based on your inputs, ensuring all essential elements are covered

• Party Details: Full legal names, addresses, and roles of all founders and the company
• Equity Structure: Clear breakdown of ownership percentages, share classes, and vesting terms
• Intellectual Property: Assignment of existing and future IP rights to the company
• Decision Making: Voting thresholds, board composition, and reserved matters
• Exit Provisions: Share transfer restrictions, drag-along and tag-along rights
• Confidentiality: Non-disclosure and data protection obligations under UK law
• Dispute Resolution: Mediation procedures and governing law clauses
• Execution Block: Signature sections compliant with Companies Act requirements

A Founders Agreement differs significantly from a Business Acquisition Agreement. While both are crucial documents for company operations, they serve distinct purposes and come into play at different stages of a business's lifecycle.

• Timing: Founders Agreements are created at company formation, while Business Acquisition Agreements come into play during business purchases or mergers
• Parties Involved: Founders Agreements bind co-founders together, whereas Business Acquisition Agreements involve buyers and sellers of established businesses
• Core Focus: Founders Agreements establish internal relationships and governance, while Business Acquisition Agreements detail transfer of ownership and assets
• Duration: Founders Agreements typically remain active throughout the company's existence, but Business Acquisition Agreements conclude once the transaction completes
• Legal Scope: Founders Agreements cover ongoing operational matters, while Business Acquisition Agreements primarily address one-time transfer details and warranties