Different Types of Founders’ Agreements
Last updated: 2021-05-31 (originally published on 2017-06-25) — by Alex Tanglao
A Founders’ Agreement is an agreement that governs the relationship between the co-founders of a company. It describes their respective rights and obligations and how the company should be operated. The main purpose is to ensure that the founders are on the same page and to avoid misunderstandings and disputes in the future.
A Founders’ Agreement is functionally the same as a Shareholders’ Agreement – the main difference being the naming of the parties as founders rather than shareholders. It is traditionally only used very early on as an initial contract between founders – and replaced by a traditional Shareholders’ Agreement, better suited to take on additional shareholders via a Deed of Adherence, once the company is established.
Find out more on the respective pages for the different variations of Shareholders’ Agreements: