Co Founder Vesting Agreement Template for Ireland

A Co Founder Vesting Agreement is a fundamental legal document that governs how shares are gradually allocated to startup founders over time. Under Irish law, this agreement provides essential protection for both your company and fellow co-founders, ensuring that share ownership is earned through sustained commitment rather than granted immediately upon company formation.

When do you need this document?

You need a Co Founder Vesting Agreement when establishing a startup with multiple founders, particularly during company incorporation or early funding rounds. This document becomes crucial when you want to prevent situations where a departing co-founder retains significant equity despite minimal contribution. It's especially important when seeking investment, as venture capitalists and angel investors typically require vesting arrangements to protect their interests and ensure founder commitment. You should also implement this agreement when bringing on new co-founders to an existing business, or when restructuring equity arrangements following significant business changes or disputes.

Key legal considerations

The agreement must clearly define vesting schedules, typically spanning three to four years with a one-year cliff period that prevents any shares from vesting until the co-founder has remained with the company for twelve months. You need to establish "good leaver" and "bad leaver" provisions that determine what happens to unvested shares when a co-founder departs voluntarily or involuntarily. The document should specify triggering events for acceleration, such as company acquisition or IPO, where vesting may accelerate partially or fully. Consider including drag-along and tag-along rights to facilitate future investment rounds, and ensure the agreement addresses share transfer restrictions and pre-emption rights that give remaining founders first refusal on any share sales.

Legal requirements in Ireland

Under the Companies Act 2014, your vesting agreement must comply with Irish company law regarding share issuance, transfer restrictions, and shareholder rights. The company's constitution must permit the share classes and transfer restrictions outlined in your vesting agreement. You must consider tax implications under the Taxes Consolidation Act 1997, particularly regarding the treatment of restricted shares and potential benefit-in-kind taxation when shares vest. The agreement should comply with Employment Equality Acts 1998-2015 to ensure vesting provisions don't discriminate against protected categories. Additionally, if your company adopts International Financial Reporting Standards, you must consider IFRS 2 requirements for share-based payment accounting. Ensure proper execution with witnessed signatures and registration of any share transfers with the Companies Registration Office when shares vest.