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Co Founder Equity Agreement

Co Founder Equity Agreement Template for South Africa

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Key Requirements PROMPT example:

Co Founder Equity Agreement

"I need a Co-Founder Equity Agreement for my Cape Town-based technology startup, with three co-founders having different equity splits (40-35-25) and a 4-year vesting schedule starting March 2025, including specific provisions for IP protection in the AI sector."

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Document background
The Co-Founder Equity Agreement is a crucial document for any new or restructuring business in South Africa where multiple founders are involved in establishing or growing a company. It serves as the foundational document that governs the relationship between co-founders, particularly regarding ownership rights, responsibilities, and operational control. This agreement is essential when establishing new companies, particularly in startup environments, or when formalizing existing founder relationships. It must comply with South African legislation, including the Companies Act 71 of 2008, relevant tax laws, and where applicable, B-BBEE requirements. The document typically includes detailed provisions for equity distribution, vesting schedules, intellectual property rights, decision-making processes, and exit mechanisms, all structured within the South African legal framework.
Suggested Sections

1. Parties: Identification of all co-founders and the company, including their full legal names, registration details, and addresses for service

2. Background: Context of the agreement, including company formation, business purpose, and relationship between co-founders

3. Definitions: Detailed definitions of key terms used throughout the agreement

4. Equity Allocation: Detailed breakdown of initial equity split between co-founders, including share classes and numbers

5. Vesting Provisions: Terms of share vesting, including vesting schedule, cliff period, and acceleration events

6. Roles and Responsibilities: Defined roles, commitments, and expectations for each co-founder

7. Intellectual Property: Assignment and ownership of IP developed by co-founders

8. Confidentiality: Protection of company and co-founder confidential information

9. Decision Making: Governance structure and decision-making processes for key company matters

10. Transfer Restrictions: Limitations on share transfers and right of first refusal provisions

11. Exit Provisions: Terms governing founder exits, including good leaver/bad leaver provisions

12. Dispute Resolution: Process for resolving disputes between co-founders

13. General Provisions: Standard legal clauses including governing law, amendments, and notices

Optional Sections

1. Non-Compete and Non-Solicitation: Restrictions on competing activities and hiring company employees, optional based on business nature and founder agreement

2. B-BBEE Compliance: Specific provisions for meeting B-BBEE requirements, necessary if relevant to company strategy

3. Tag-Along and Drag-Along Rights: Rights for minority protection and exit facilitation, optional for smaller ventures

4. External Investment Provisions: Terms governing future investment rounds and equity dilution, relevant if seeking external funding

5. Founder Loan Arrangements: Terms of any loans made by founders to the company, if applicable

6. Death and Incapacity: Specific provisions for handling equity in case of founder death or incapacity

7. Special Voting Rights: Any special voting or veto rights for specific founders, if agreed upon

Suggested Schedules

1. Schedule 1: Share Capital Table: Detailed breakdown of shareholding, including share classes, numbers, and percentage ownership

2. Schedule 2: Vesting Schedule: Detailed vesting timeline and milestones for each founder

3. Schedule 3: Initial Business Plan: Overview of company's business plan and strategic objectives

4. Schedule 4: Founder Details: Comprehensive information about each founder, including contact details and tax numbers

5. Schedule 5: IP Register: List of existing IP brought into the business by each founder

6. Schedule 6: Key Performance Indicators: Specific metrics for measuring founder performance and contributions

7. Appendix A: Share Certificate Templates: Templates for share certificates in compliance with Companies Act requirements

8. Appendix B: Deed of Adherence: Template for new shareholders to agree to the terms of the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions

















































Clauses






































Relevant Industries

Technology and Software

E-commerce

Financial Services

Professional Services

Manufacturing

Healthcare

Education Technology

Renewable Energy

Media and Entertainment

Biotechnology

Retail

Consulting

Real Estate

Agricultural Technology

Mining and Resources

Relevant Teams

Legal

Executive Leadership

Board of Directors

Corporate Governance

Finance

Corporate Development

Human Resources

Company Secretariat

Relevant Roles

Chief Executive Officer

Managing Director

Chief Financial Officer

Chief Technology Officer

Chief Operating Officer

Company Founder

Business Owner

Executive Director

Non-Executive Director

Company Secretary

General Counsel

Legal Director

Corporate Attorney

Investment Manager

Startup Founder

Managing Partner

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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