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Home / IP & Legal / Founders Agreement
Last updated: 2 October 2026
Most co-founder disputes come from things that were never written down. Expertvuw’s team drafts founders’ agreements that settle equity, vesting, roles, decision-making, IP ownership and what happens if a founder leaves — before investors ask.
A founders’ agreement is a contract among the co-founders of a startup, usually signed at or soon after incorporation. It records each founder’s equity, how that equity vests over time (commonly four years with a one-year cliff), roles and time commitment, decision-making, salary or no-salary arrangements, and how deadlocks are resolved.
Two terms matter most to investors. First, IP assignment: all code, designs, brand and know-how created by founders for the business should be assigned to the company in writing — under the Copyright Act, 1957, ownership of work created by a founder who is not an employee does not pass automatically. Second, leaver provisions: what happens to unvested and vested shares if a founder leaves, distinguishing good and bad leavers.
Because share transfer and buy-back restrictions must be consistent with the Companies Act, key terms should also be reflected in the Articles of Association, and share buy-backs need to follow the Act’s procedures.
Basis: Indian Contract Act, 1872; Companies Act, 2013 (sections 58, 68 and Articles); Copyright Act, 1957 (sections 17–19, assignment). Last updated: 27 September 2026.
Commonly four years with a one-year cliff.
Founder-created IP must be assigned to the company in writing.
Terms for vested and unvested shares when a founder exits.
Mechanism for resolving founder disagreements.
Share restrictions should match the AoA.
Investors check founder IP and vesting terms.
Early-stage informality becomes costly later.
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Founders’ agreements connect with these services.
Rights once investors join.
Employee stock option plans.
DPIIT recognition.
Registering the brand in the company's name.
Understand founder expectations.
Agree equity, vesting and roles.
Prepare the agreement.
Founders review together.
Execute and assign IP.
Amend the Articles where needed.
Keep the agreement in step with the company.
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Share your query and our team will reply during business hours.
Ideally at or soon after incorporation, before significant work or funding.
Founders earn their shares over time, commonly four years with a one-year cliff.
Investors expect the company, not individual founders, to own the code, brand and know-how.
A founder who leaves in circumstances defined in the agreement, often losing some or all shares.
No. An SHA usually comes later with investors; the founders’ agreement covers founders among themselves.
ACS – Director, Expertvuw Management Pvt Ltd
Agreements and policies are drafted by Expertvuw’s team for your review and negotiation. Where you need a legal opinion, dispute advice or representation, it is provided by independent advocates. Expertvuw is a corporate services company, not a law firm.