Agree this before you need it. There is one UAE-specific wrinkle: **founder vesting is difficult to operate over a mainland LLC**, because buying back unvested shares requires a notarised transfer with authority approval — and a departing founder who will not attend the notary is a real obstacle. Where vesting matters, hold the equity at a common-law entity.
Founders’ Agreement
Equity, roles, vesting and exit between founders
Agree this before you need it. There is one UAE-specific wrinkle: founder vesting is difficult to operate over a mainland LLC, because buying back unvested shares requires a notarised transfer with authority approval — and a departing founder who will not attend the notary is a real obstacle. Where vesting matters, hold the equity at a common-law entity.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], [licence / registration] [NUMBER] |
| Jurisdiction | [Mainland LLC / Free zone / DIFC / ADGM / Offshore holdco] |
| Founders | [NAMES] |
| Date | [DATE] |
| Equity split | [PERCENTAGES] |
| Vesting | [4] years, [12] months credited for time already served |
| Buyback price for unvested shares | [Nominal value / the amount paid] |
| Decision threshold | [Unanimous for reserved matters; majority otherwise] |
| Full-time commitment from | [DATE] for each founder |
| IP assignment executed | [DATE] |
| Governing law and forum | [DIFC / ADGM / Emirate of ______] |
1. Roles and Commitment
| Founder | Role | Owns these areas | Full time from | Salary |
|---|---|---|---|---|
| [NAME] | [TITLE] | [THREE OR FOUR SPECIFIC AREAS] | [DATE] | [AED or nil] |
| [NAME] | [TITLE] | [AREAS] | [DATE] | [AED or nil] |
| [NAME] | [TITLE] | [AREAS] | [DATE] | [AED or nil] |
1.1Each Founder shall devote their full working time from the date stated and shall not engage in any other business without the others’ consent.
1.2[Where a founder is part-time initially] [NAME] shall commit [NUMBER] days per week until [DATE]. State this openly — unequal commitment with equal equity is the most common cause of founder disputes.
1.3Visa and permit position. Each Founder shall hold a valid residence visa and work permit appropriate to their role. A founder working in the UAE on a spouse or visit visa, or on another employer’s sponsorship, is a compliance exposure for the company as well as for them.
1.4Each 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.
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.
A buyback of unvested shares requires a notarised transfer with authority approval, and a departing founder who will not attend the notary can block it indefinitely. Clause 2.8 requires a notarised power of attorney from each founder at the outset. Without it, vesting is a provision you cannot enforce.
DIFC, ADGM and offshore holding companies handle vesting, buybacks, option pools and transfers in a way a mainland LLC cannot. Where founder vesting and future investment matter, that structure is worth building before the first share is issued.
Every provision here is easy to agree while everyone is optimistic and close to impossible to negotiate fairly eighteen months in. The document is worth an afternoon at the start.
A definition extending to conduct the other founders consider detrimental allows a majority to expel a founder and strip 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 in early-stage diligence and it can stop a financing. Execute a separate assignment as well as including Clause 4.1.
Founders routinely register the brand and domains personally before incorporation and never transfer them. Easy to fix now, real leverage for a departing founder later.
A founder working in the UAE on a spouse visa, a visit visa or another employer’s sponsorship is a compliance exposure for the company. Where founders are also employees, WPS payment and the MOHRE-registered salary must match. Ask the question in writing.
A founder still bound by a restrictive covenant, or who built the prototype on a former employer’s time or systems, brings a real risk. Restraints are enforceable in the UAE where reasonable, and a former employer can sue.
Money put in without paperwork becomes a dispute at the first financing or exit — was it a loan, was it capital, is it repayable, does it carry interest. Ten minutes now saves a great deal later.
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 forces the reasoning to be articulated. Splits agreed on instinct get re-litigated later from divergent memories. Writing it down does not make it fair, but it makes it explicable.
A fifty-fifty company can be paralysed by one 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.
Resigning does not remove a name from the trade licence, a bank mandate, a system login or a live power of attorney. Clause 6.3(a) covers it, and it is the step most often overlooked when a founder leaves amicably.
Where a founder is also an employee, gratuity, leave and final salary are due within 14 days of the last working day and are separate from the share buyback. Two processes, two timelines, both easy to miss in an emotional departure.
Reflects UAE law and practice current as of {{DATE OF USE}}. Company law, notarisation requirements, employment entitlements and free zone rules all change, and the Commercial Companies Law was amended by Federal Decree-Law 20 of 2025 — take UAE legal advice before incorporation where the founders’ contributions are materially unequal or vesting matters.
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.