Founders Stock Agreement for Singapore

Founders Stock Agreement Template for Singapore

A comprehensive legal agreement governed by Singapore law that establishes the terms and conditions of share ownership among company founders. It details share allocation, vesting schedules, transfer restrictions, and founders' rights and obligations in accordance with the Singapore Companies Act and related legislation. The agreement includes protective provisions for all parties and establishes governance framework for the company's early stages.

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What is a Founders Stock Agreement?

The Founders Stock Agreement is a crucial document for any new company establishment in Singapore, particularly during the early stages of company formation. This agreement is essential when two or more founders come together to establish a business and need to formalize their equity arrangements. It ensures compliance with Singapore's Companies Act and Securities and Futures Act while protecting founders' interests through clear share allocation, vesting schedules, and transfer restrictions. The agreement typically serves as a foundational document that guides founder relationships and company governance throughout the business lifecycle.

What sections should be included in a Founders Stock Agreement?

1. Parties: Identifies and defines all parties to the agreement, including individual founders and the company

2. Background: Context of the agreement, company formation details, and purpose of the founders' arrangement

3. Definitions: Key terms used throughout the agreement including share classes, vesting, transfer rights, and other important concepts

4. Share Allocation: Details of initial share distribution among founders, including number of shares, classes, and consideration

5. Vesting Provisions: Schedule and terms of share vesting, including cliffs, acceleration events, and good/bad leaver provisions

6. Transfer Restrictions: Limitations on share transfers, right of first refusal, and permitted transfer exceptions

7. Founders' Commitments: Obligations and duties of founders, including time commitment, exclusivity, and performance expectations

8. Termination: Circumstances and process for agreement termination, including consequences for share ownership

What sections are optional to include in a Founders Stock Agreement?

1. Tag-Along Rights: Rights of minority shareholders to join in sale of shares on same terms as majority shareholders

2. Drag-Along Rights: Rights to force minority shareholders to join in sale of the company under specified conditions

3. Intellectual Property Assignment: Assignment of founders' intellectual property rights to the company

4. Non-Compete Provisions: Restrictions on founders engaging in competitive activities during and after involvement with company

What schedules should be included in a Founders Stock Agreement?

1. Share Vesting Schedule: Detailed timeline and conditions for share vesting, including specific dates and milestones

2. Share Capital Table: Complete breakdown of share ownership, including all share classes and fully diluted capitalization

3. Form of Share Certificate: Template for share certificates to be issued to founders

4. Deed of Adherence: Template document for new shareholders to join the agreement

5. List of Reserved Matters: Comprehensive list of decisions requiring special majority or unanimous approval

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Singapore

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Companies Act (Cap. 50): Primary legislation governing company formation, share issuance, shareholders' rights, share capital structure, share transfers, directors' duties and corporate governance requirements in Singapore

Securities and Futures Act (Cap. 289): Legislation regulating securities offerings, trading, disclosure requirements and restrictions on share transfers in Singapore

Income Tax Act: Tax legislation covering implications for founders receiving shares, tax treatment of share transfers, vesting schedules, and related tax benefits or obligations

Employment Act: Labor law addressing employment rights, stock options and share-based compensation regulations when founders are also employees

MAS Guidelines: Monetary Authority of Singapore's regulatory framework for securities and compliance requirements for private company share issuance

Share Allocation and Vesting: Key agreement provisions detailing how shares are allocated among founders and the vesting schedule requirements

Transfer Restrictions: Provisions limiting how and when founders can transfer their shares to third parties

Voting Rights: Specifications of shareholders' voting rights and decision-making processes

Pre-emptive Rights: Rights of existing shareholders to maintain their ownership percentage by participating in future share issues

Tag-along and Drag-along Rights: Provisions protecting minority shareholders (tag-along) and enabling majority shareholders to force minority participation in a sale (drag-along)

Non-compete and Confidentiality: Clauses restricting founders' ability to compete and protecting company confidential information

Exit Provisions: Terms governing how founders can exit the company and what happens to their shares

Dispute Resolution: Mechanisms and procedures for resolving conflicts between founders and shareholders

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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