The hardest conversations in this document are the ones nobody wants at the start: what happens if a founder leaves, who decides when you disagree, and who owns what. Having them while everyone is optimistic costs an afternoon. Having them later, under pressure, costs the company.
Founders’ Agreement
Between the founders of [COMPANY NAME]
The hardest conversations in this document are the ones nobody wants at the start: what happens if a founder leaves, who decides when you disagree, and who owns what. Having them while everyone is optimistic costs an afternoon. Having them later, under pressure, costs the company.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], UEN [UEN] |
| Founders | [NAMES] |
| Date | [DATE] |
| Equity split | [PERCENTAGES] |
| Vesting | [4] years, [12]-month cliff, [12] months credited for time served |
| Decision threshold | [Unanimous for reserved matters; majority otherwise] |
| Full-time commitment from | [DATE] for each founder |
| IP assignment executed | [DATE] |
| Governing law | Singapore |
1. Roles and Commitment
| Founder | Role | Responsibilities | Full time from | Salary |
|---|---|---|---|---|
| [NAME] | [TITLE] | [THREE OR FOUR SPECIFIC AREAS THEY OWN] | [DATE] | [S$ or nil] |
| [NAME] | [TITLE] | [RESPONSIBILITIES] | [DATE] | [S$ or nil] |
| [NAME] | [TITLE] | [RESPONSIBILITIES] | [DATE] | [S$ or nil] |
1.1Each Founder shall devote their full working time to the Company from the date stated, and shall not engage in any other business without the consent of the other Founders.
1.2[Where a Founder is part-time initially] [NAME] shall commit [NUMBER] days per week until [DATE], and full time thereafter. State this openly. Unequal commitment with equal equity is the most common cause of founder disputes.
1.3Each Founder shall act in good faith towards the Company and the others, and shall disclose any conflict of interest.
2. Equity and Vesting
2.1The Founders hold shares in the proportions stated. Where the split is unequal, the reasons are recorded in Schedule 1.
2.2Vesting. Each Founder’s shares vest over [4] years from the Vesting Commencement Date, with [12] months credited for time already served, and monthly thereafter.
2.3Unvested shares are subject to buyback by the Company or the other Founders at [nominal value] on cessation.
2.4A Founder retains voting rights and dividends on unvested shares while they remain a Founder.
6 more pages in the Word file
This is page 1 of the Word document, exactly as it appears when you open it. Fields shown like THIS are placeholders for you to complete.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
Every provision here is easy to agree while the founders are optimistic and difficult to agree once something has gone wrong. The document is worth an afternoon at the outset and is close to impossible to negotiate fairly eighteen months in.
Founder vesting protects the founders who stay from the one who leaves after six months holding a third of the company. Agreeing it between equals at incorporation is a very different conversation from having it imposed by an investor at a term sheet. Credit time already served — that is what makes it fair.
A bad leaver definition extending to conduct the others consider detrimental allows a majority to expel a founder and strip their vested equity during a disagreement. Confine it to dismissal for cause, fraud, and material unremedied breach.
Code, designs and brand created before the company existed belong to the founders personally unless assigned. This is the most common serious defect found in early-stage diligence, and it can stop a financing. Clause 4.1 covers it — execute a separate assignment as well.
A founder still bound by a non-compete, or who built the prototype using a former employer’s resources or on their time, brings a real risk to the company. Restrictive covenants are enforceable in Singapore where reasonable, and a former employer can sue. Ask the question in writing.
Money put into the company by a founder, with no paperwork, becomes a dispute at the first financing or exit — was it a loan, was it capital, is it repayable, does it carry interest. Clause 5.3 requires documentation at the time. It takes ten minutes and saves a great deal.
Where one founder is full time and another is not, an equal split creates resentment that compounds. Say it openly in Clause 1.2, and consider whether the split or the vesting should reflect it.
Schedule 1 asks the founders to articulate the reasoning. Splits agreed on instinct are re-litigated later from memory, and memories diverge. Writing it down does not make the split fair, but it does make it explicable.
A fifty-fifty company with no deadlock mechanism can be paralysed by a single disagreement. Clause 3.2 provides for a named adviser or mediation. Consider also whether one founder should hold a single additional share, or whether an independent director should be appointed early.
Post-departure restrictions are enforceable only so far as reasonable, and an over-broad covenant fails entirely rather than being read down. A twelve-month non-solicitation limited to customers and colleagues the founder actually dealt with is defensible; a broad non-compete usually is not.
Resigning a directorship does not remove a bank mandate, a signing authority or a system login. Clause 6.3(a) covers it, and it is the step most often overlooked when a founder leaves amicably.
On the first external financing, investors will require a shareholders’ agreement and an amended constitution, and this agreement will be replaced. Clause 7.3 acknowledges that. The work is not wasted — what is agreed here shapes what founders can hold on to in that negotiation.
Transfer restrictions and pre-emption rights in this agreement should be mirrored in the constitution. Where the company has adopted the Model Constitution by default, they will not be, and the agreement binds only the founders contractually.
The thirteen questions are the ones that surface disagreement early, when it is cheap. Working through them together is more valuable than the rest of the document, and founders who cannot get through them are learning something important.
Reflects Singapore law current as of {{DATE OF USE}}. VIMA publishes model documents that will supersede this at a financing, and requirements under the Companies Act 1967 on transfers, registers and resolutions change — have this reviewed by a lawyer before incorporation where the founders’ contributions are materially unequal.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.