The Cofounder Agreement is a fundamental document used when establishing a new business venture or formalizing an existing partnership in Saudi Arabia. It serves as the cornerstone of the founding team's legal relationship, particularly crucial in the context of Saudi Arabia's evolving business landscape under Vision 2030. This document is essential when two or more individuals or entities come together to establish a business, requiring careful consideration of both Shariah compliance and modern commercial practices. The agreement typically covers critical areas such as equity structure, capital contributions, management rights, profit sharing, and exit mechanisms, while ensuring alignment with Saudi Arabian companies law and regulatory requirements. It's particularly important for startups and new ventures seeking to establish clear governance frameworks and protect all parties' interests from the outset.
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1. Parties: Identification of all cofounders and the company (if already formed), including full legal names, addresses, and national ID/registration numbers
2. Background: Context of the agreement, business purpose, and general intentions of the parties
3. Definitions: Detailed definitions of key terms used throughout the agreement
4. Company Formation: Details about the company structure, legal form, and registration requirements
5. Capital Contribution: Specification of initial and future capital contributions from each cofounder
6. Equity Distribution: Details of share allocation, types of shares, and any vesting schedules
7. Roles and Responsibilities: Detailed description of each cofounder's role, duties, and time commitment
8. Decision Making: Procedures for company decisions, voting rights, and management structure
9. Intellectual Property: Assignment and ownership of IP created before and during the business
10. Confidentiality: Protection of company and cofounder confidential information
11. Non-Competition: Restrictions on competing activities during and after involvement
12. Transfer of Shares: Rules and procedures for transferring ownership interests
13. Exit Provisions: Procedures for cofounder exit, including voluntary and involuntary departures
14. Dispute Resolution: Process for resolving conflicts, including mediation and arbitration procedures
15. Term and Termination: Duration of the agreement and conditions for termination
16. General Provisions: Standard legal clauses including governing law, notices, and amendments
1. Shariah Compliance: Specific provisions ensuring compliance with Islamic law principles, required if explicitly following Islamic financing structure
2. Foreign Ownership Provisions: Additional requirements and restrictions for non-Saudi cofounders
3. Employee Matters: Details of employment terms if cofounders will be employees, including salary and benefits
4. Future Financing: Procedures and rights regarding future investment rounds and capital raising
5. Family Office Provisions: Special provisions for family-owned businesses or family member cofounders
6. Industry-Specific Compliance: Additional regulations for specific regulated industries (e.g., fintech, healthcare)
7. Intellectual Property License: Specific licensing terms if any cofounder brings existing IP to the company
1. Schedule 1: Business Plan: Detailed business plan including market analysis, financial projections, and growth strategy
2. Schedule 2: Capital Contributions: Detailed breakdown of each cofounder's capital contributions, including valuation of non-cash contributions
3. Schedule 3: Share Vesting Schedule: Detailed vesting schedule for founder shares, including milestones and timelines
4. Schedule 4: Intellectual Property Register: List of all intellectual property owned by or licensed to the company
5. Schedule 5: Key Performance Indicators: Specific performance metrics for each cofounder's role and responsibilities
6. Schedule 6: Reserved Matters: List of decisions requiring special majority or unanimous approval
7. Appendix A: Company Formation Documents: Copies of company registration and other regulatory documents
8. Appendix B: Shareholders' Resolution: Initial shareholders' resolutions adopting the agreement and company policies
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