Founders Contract Template for the Philippines

A Founders Contract is an essential legal document that establishes the foundational relationship between co-founders when starting a business in the Philippines. This agreement creates a clear framework for your startup's governance, equity distribution, and operational structure while ensuring compliance with the Revised Corporation Code of the Philippines and other relevant business laws.

When do you need this document?

You need a Founders Contract when establishing a new company with multiple founders, particularly in technology startups, service businesses, or any venture requiring significant initial investment or intellectual property development. This document becomes crucial before incorporating your company, securing initial funding, or when formalizing an existing informal partnership. It's especially important when founders are contributing different types of value such as capital, expertise, technology, or market connections. The contract should be in place before any major business decisions are made or external investors are approached, as it demonstrates professional governance and reduces investment risks.

Key legal considerations

Your Founders Contract must address several critical legal elements to protect all parties involved. Equity distribution should be clearly defined, including vesting schedules that prevent founders from leaving early with full ownership stakes. Intellectual property clauses must specify that all business-related IP developed before and during the company's operation belongs to the corporation. Decision-making processes should establish voting rights, board composition, and procedures for major business decisions. Exit provisions must outline what happens when a founder leaves voluntarily or involuntarily, including share buyback mechanisms and non-compete obligations. The contract should also address capital contributions, both initial and future funding responsibilities, and establish clear roles and time commitments for each founder.

Legal requirements in Philippines

Under Philippine law, your Founders Contract must comply with the Revised Corporation Code, which governs corporate formation and stockholder rights. The Securities Regulation Code applies when dealing with founder shares and equity distribution, requiring proper documentation and potential registration depending on the structure. Foreign ownership restrictions must be carefully considered, as certain industries limit foreign equity to 40% or less. The contract must align with your Articles of Incorporation and corporate bylaws, ensuring consistency in governance structures. Labor Code provisions may apply if founders are also employees, affecting compensation and benefits arrangements. All agreements should be notarized to ensure enforceability, and any intellectual property provisions must comply with the Intellectual Property Code of the Philippines to protect company assets and founder-contributed technology or innovations.