Co Founder Vesting Agreement Template for Singapore

A Co Founder Vesting Agreement is a crucial legal document that determines how and when you and your co-founders will receive full ownership of your equity stakes in your Singapore company. This agreement creates a structured timeline for earning shares, protecting both the company and all founders from the risks associated with early departures and ensuring long-term commitment to the business venture.

When do you need this document?

You need a Co Founder Vesting Agreement when starting a company with multiple founders, particularly before seeking external investment or during incorporation. Investors typically require vesting agreements to ensure founder commitment and protect their investment. The document becomes essential when co-founders bring different levels of experience, capital, or time commitments to the venture. You should also implement this agreement when existing founders want to formalize their equity arrangements or when bringing new co-founders into an established company. Early-stage startups benefit most from establishing vesting schedules before operational complexities arise.

Key legal considerations

The vesting schedule typically spans four years with a one-year cliff period, meaning no shares vest until you complete one full year with the company. After the cliff, shares usually vest monthly or quarterly until the full allocation is earned. Termination provisions specify what happens to unvested shares when a founder leaves - whether through resignation, termination for cause, or involuntary departure. Good leaver and bad leaver clauses determine whether departing founders can retain vested shares or if the company has repurchase rights. Acceleration clauses may allow immediate vesting upon certain events like company sale or founder death. The agreement must clearly define what constitutes full-time commitment and specify any conditions that could affect vesting, such as performance milestones or continued employment.

Legal requirements in Singapore

Under Singapore's Companies Act, all share issuances and transfers must be properly documented and filed with ACRA. The agreement must comply with the company's constitution and any existing shareholders' agreements. If your company has foreign founders, you must consider Employment Act requirements regarding work passes and employment terms. The Securities and Futures Act governs any restrictions on share transfers and disclosure requirements. Tax implications under the Income Tax Act affect how vested shares are treated as income, potentially creating tax liabilities for founders upon vesting. The agreement must specify Singapore law as the governing jurisdiction and include proper dispute resolution mechanisms. Board approval is typically required for implementing vesting schedules, and the company secretary must maintain accurate records of vesting events and share ownership changes.