Co Founder Vesting Agreement Template for Nigeria

A Co Founder Vesting Agreement is a fundamental legal document that governs how equity is distributed and earned among startup founders in Nigeria. Under the Companies and Allied Matters Act (CAMA) 2020, this agreement ensures that founders earn their shares gradually over time rather than receiving full ownership immediately, protecting both the company and individual founders from potential disputes and premature departures.

When do you need this document?

You need a Co Founder Vesting Agreement when establishing a new company with multiple founders, especially in the early stages of your startup. This document becomes crucial when you're allocating equity among co-founders who will contribute different skills, resources, or time commitments to the business. It's particularly important before seeking external investment, as investors typically require clear founder equity structures during due diligence. You should also implement this agreement when bringing on new co-founders to an existing business or when restructuring founder relationships to ensure fair and legally compliant equity distribution.

Key legal considerations

The vesting schedule is the most critical element, typically spanning 3-4 years with a one-year cliff period that ensures founders remain committed for at least 12 months before earning any shares. The agreement must clearly define what constitutes "good leaver" versus "bad leaver" scenarios, as this determines how unvested shares are handled upon departure. Acceleration provisions should address what happens to unvested shares during company sale, merger, or other liquidity events. You must also consider tax implications under the Nigerian Income Tax Act, as vested shares may trigger capital gains obligations. The agreement should include intellectual property assignment clauses ensuring all founder-created IP transfers to the company, and specify board representation rights tied to shareholding percentages.

Legal requirements in Nigeria

Under CAMA 2020, your Co Founder Vesting Agreement must comply with Nigerian company law provisions regarding share issuance and transfer restrictions. The agreement requires proper documentation through the Corporate Affairs Commission (CAC), including filing of share allotment returns and maintaining updated shareholder registers. Nigerian securities law under the Investment and Securities Act 2007 may apply if your startup plans future public offerings or external investment. The agreement must specify the class of shares being vested, voting rights attached to those shares, and any transfer restrictions that comply with Nigerian corporate governance requirements. You'll need to ensure the vesting structure doesn't violate Nigerian employment law if founders are also employees, and consider compliance with foreign exchange regulations if international founders are involved. The document should be executed with proper legal formalities including witness signatures and notarization where required by Nigerian law.