Founders' Agreement (India)
This template outlines the governance, ownership, and operational framework for a new company's founders. It covers essential aspects such as equity vesting, roles and responsibilities, non-compete clauses, and procedures for the sale of shares or founder departure.
FOUNDERS AGREEMENT
This Founders Agreement (the “Agreement”) is entered into, on _____________, (“Effective Date”), by and among:
_______________, a company incorporated under the laws of India and having its registered office _________________,
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About this template
What is this template?
This document is a pre-incorporation or early-stage governance contract between individuals launching a business in India. It contains specific Indian statutory references, a 4-year vesting schedule, and detailed 'Bad Leaver' definitions. It is not a standard Partnership Deed or a generic Employment Contract.
When should you use it?
Use this when starting a business venture with others in India before or shortly after formal incorporation. Use a Shareholders' Agreement instead if you are bringing on external investors like VCs or Angel investors who require specific liquidation preferences.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 2 | Ownership of the Company | Specifies the percentage of equity shares held by each founder and their respective capital contributions to the entity. |
| 3 | Vesting | Imposes a 48-month vesting schedule with a 12-month cliff before any founder equity is fully earned. |
| 4 | Roles and Responsibilities | Designates specific executive titles and the primary business functions each founder is responsible for managing. |
| 5 | Decision-making and Voting | Requires a majority vote for standard operations and unanimous consent for key decisions like changing business nature or issuing debt. |
| 7 | Intellectual Property Assignment | Obliges founders to transfer all rights to work products and inventions created for the startup to the company. |
| 9 | Termination and Departure | Defines 'Good Leaver' and 'Bad Leaver' scenarios and the resulting impact on a founder's unvested equity. |
| 10 | Confidentiality | Restricts founders from disclosing trade secrets or business information for a period of 2 years after leaving the company. |
| 12 | Dispute Resolution | Mandates arbitration in accordance with the Arbitration and Conciliation Act, 1996, to be held in India. |
Who it's for
- individuals in India forming a new private limited company together
- co-founders seeking to document equity vesting and IP transfer early
- Indian startup teams defining majority and unanimous voting rights
- partners establishing 'Bad Leaver' clawback provisions for unvested shares
How long it runs and how it's signed
Law it's drafted under
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