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[to be printed on stamp paper of appropriate value]

CO-FOUNDERS AGREEMENT
This agreement is executed at [] [insert place] on [] [insert date].

BETWEEN
1. [] [Insert name of Co-Founder], residing at [] [Insert address of Co-Founder],
which expression shall, unless it be repugnant to the subject or context thereof,
include their legal heirs, successors, nominees and permitted assignees, of the First
Part;
2. [] [Insert name of Co-Founder], residing at [] [Insert address of Co-Founder],
which expression shall, unless it be repugnant to the subject or context thereof,
include their legal heirs, successors, nominees and permitted assignees of the Second
Part.
3. [] [Insert name of Co-Founder], residing at [] [Insert address of Co-Founder],
which expression shall, unless it be repugnant to the subject or context thereof,
include their legal heirs, successors, nominees and permitted assignees of the Third
Part.

Each of the parties shall be individually referred to as a Co-Founder and collectively as the
Co-Founders.
WHEREAS the Co-Founders are [] [insert background about how the co-founders know
each other]
WHEREAS the Co-Founders [have started / contemplate starting] work on [] [insert
description of the business] commenced activities into the field of [] and allied areas
(Business) in [] [insert approximate time e.g. month and year of commencing
activities], carried out or proposed to be carried out under the name of [] [specify the brand
name which is used for the business];
WHEREAS the Co-Founders have decided to enter into this agreement to crystallize the
terms of their relationship with one another.
IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS
FOLLOWS:
1.

ADMISSION OF THE NEW CO-FOUNDER

1.1.

The Co-Founders have identified a prospective business opportunity in the area in


which the Business is planned and have agreed to work together [until / for a period
of] [] [mention a milestone, e.g. completion of the first phase of the product or
launch of the website, or a timeline in months or years] (Initial Objective or Initial
Timeline) from the effective date of [].

1.2

Any costs incurred by any of the Co-Founders, personal loans of the Co-Founders or
their friends, family, relatives or any angel investor to the Business will be reimbursed
from the revenues, if any. Profits of the Business shall be shared in the following
ratio:

[Insert name of Co-Founder]: [] [Mention economic interest]

[Insert name of Co-Founder]: [] [Mention economic interest]

[Insert name of Co-Founder]: [] [Mention economic interest]

1.3

The Co-Founders shall jointly participate in the management and operational


decision-making processes of the Business, and in execution of the business strategy,
as explained in this agreement.

2.

TERM AND VALIDITY OF THIS AGREEMENT

2.1

This agreement shall govern the relationship amongst the Business and the CoFounders. If the Co-Founders agree to carry on the Business in the long term, they
shall, [as soon as it is feasible] organize themselves into a formalized business entity
such as a partnership, LLP, company or a registered non-profit by entering into
appropriate documentation and performing necessary statutory filings. The actions
under this clause shall be taken latest by [the realization or completion of the Initial
Objective or the Initial Timeline].

2.2

Unless a Co-Founder is dismissed or retired as explained later in this agreement, or


has stopped working for the Business, the Co-Founders shall ensure that the
commercial understanding in this agreement (particularly the provisions with respect
to the economic interest and capital contribution) is factored into the documentation
executed for any formal business structure that is subsequently adopted.

2.3

Until the actions described above are completed, this agreement shall continue to
remain valid and govern the relationship between the Co-Founders. The Co-Founders
shall ensure that

2.4

Any amendments to this document or admission of new Co-Founders shall only be


made in writing.

3.

RESPONSIBILITIES OF THE CO-FOUNDERS

3.1

The Co-Founders will share general responsibility for the reputation and the economic
growth of the business. Currently, specific responsibilities of the Co-Founders are as
follows:
[Insert name of Co-Founder]
[] [Mention responsibilities]1

[Insert name of Co-Founder]


[] [Mention responsibilities]

[Insert name of Co-Founder]


[] [Mention responsibilities]

3.2The above allocation is not strict and responsibilities on some of the above areas may be
shared with other Co-Founders. Wherever necessary, each Co-Founder shall cooperate with each other and provide necessary help to other Co-Founders towards
discharging their specific responsibility, for the overall benefit of the Business.
3.3

The roles mentioned above may be modified from time to time depending on the
needs of the Business and based on mutual understanding. The modification may even
be recorded or evidenced by electronic communication.

4.

MUTUAL RIGHTS AND OBLIGATIONS OF THE CO-FOUNDERS


In her capacity as a co-founder of the business, the New Co-Founder shall be
expected to participate in team discussions and development of plans. She will have
the following rights:

1 E.g. creation of product, working on pitches and investment, marketing, building sales
channels, etc.

The right to be represented as a co-founder of the Business in all


communications and publicity materials

Right to participate in discussions pertaining to the company

Right to be involved in developing future expansion plans and strategies

Right to inspect the books of accounts

Right to be treated fairly

Right to have the terms of this agreement incorporated into a subsequent


business structure

[specify any other general responsibility you contemplate.]


5.

CAPITAL CONTRIBUTION AND PROFIT-SHARING

5.1

The Co-Founders shall contribute the following amounts as their share of capital in
the business:

[Insert name of Co-Founder]: [] [Mention capital contribution]

[Insert name of Co-Founder]: [] [Mention capital contribution]

[Insert name of Co-Founder]: [] [Mention capital contribution]

5.2

Any excess amounts of capital beyond the limits above shall be expressly
acknowledged by the other Co-Founders in writing. However, capital contribution
shall not alter the economic interest of the Co-Founder in the Business.

5.3

Upon admission as a partner of the LLP or upon incorporation of the Business as a


company, a minimum amount of capital contribution may be necessary under law. The
Co-Founders agree to contribute such amounts as their capital contribution towards
the Business.

6.

RESTRAINT ON COMPETING BUSINESS

6.1

The Co-Founders shall be expected to involve herself full-time in the carrying out of
their responsibilities towards the Business and [will not carry out any other activity
for remuneration or charity (irrespective of whether it competes with the Business)]
OR
[will not carry out any competing activity that conflicts with their duties, but may
carry out part-time occupations or jobs so as to earn upto [] [specify amount earned
at the current job or a minimum salary that is acceptable]]
without consent from the other Co-Founders.

7.

PROFIT-SHARING, SALARY AND DRAWINGS

7.1

Unless all the Co-Founders decide by consensus to share the profits equally, profits
will be ordinarily shared in the ratio of their economic interest in the Business.

7.2

[The Co-Founders may mutually agree to draw reasonable salaries to meet their
personal costs and expenses, if the financial position of the Business permits.]

8.

MINIMUM COMMITMENT OF PARTNERS


The Co-Founders agree to be committed to the Business until the realization/
completion of the Initial Objective or Initial Timeline subject to Clause 6 above.

9.

PERFORMANCE
PERFORMANCE

GOALS

AND

CONSEQUENCES

OF

NON-

9.1

Performance goals between the Co-Founders shall be clearly communicated amongst


them on a periodic basis. Any differences or opinions pertaining to underperformance
will be escalated and discussed on a prompt basis between the Co-Founders.
Defaulting Co-Founders shall be given sufficient opportunity to make up for any
shortfall in performance.

9.2

Continuous non-performance, non-availability or inability to perform duties without


satisfactory justification, despite necessary intimations shall render the Co-Founders
liable to expulsion. Further, dishonest or unethical conduct damaging to the business
or reputation of other Co-Founders, serious breach of discipline in course of
performance of duties at workplace or otherwise, including sexual harassment, as well
as commission of a crime involving moral turpitude can lead to expulsion of any CoFounder if other Co-Founders unanimously so desire.

10.

VOLUNTARY RETIREMENT

10.1

If any Co-Founder voluntarily wishes to leave the Business before realization/


completion of the Initial Objective or Initial Timeline, or is unwilling or unable to stay
committed to the Business on a full-time basis or is expelled before the realization/
completion of the Initial Objective or Initial Timeline, they will be divested of their
economic interest in the business and their stake will be distributed equally to the
remaining Co-Founders.
However, the outgoing Co-Founder will be entitled to profits (represented under the
financial statements) that corresponds to their economic stake for each month / year
which they have worked as Co-Founders, which will be calculated based on the actual
finances of the Business at the time of leaving.

10.2

Expulsion or voluntary retirement before the Initial Objective or Initial Timeline is


completed pursuant to Clause 9 or this Clause 10 will deprive the outgoing CoFounder of his co-founder status in the business.

11.

CONSEQUENCES OF DEATH
In the event of death of a Co-Founder, the economic stake shall be subject to a fair
valuation conducted by the Chartered Accountant, using the book value for reference,
and may be purchased in the following manner:

the surviving Co-Founders proportionately, or

a ratio that is mutually decided depending on the financial ability of the surviving CoFounders, or

if the Co-Founders are unable or unwilling to buy, the economic interest shall devolve
to the successors of the deceased Co-Founder, without conferring any managerial or
operational rights in the conduct of the Business.

12.

DISPUTE RESOLUTION AND JURISDICTION

12.1All disputes between the Partners inter-se or between any of the Co-Founders with
respect to the Business, and which cannot be resolved amicably must be referred to
arbitration as per the provisions of the Arbitration and Conciliation Act, 1996, in [],
or such other city as the disputing parties may unanimously agree upon.
12.2The arbitration shall be conducted in English by a sole arbitrator appointed jointly by
the parties, as far as possible. If the parties are unable to agree upon an arbitrator, an
arbitration panel consisting of 3 arbitrators will resolve the dispute, where each of the
parties appoints one arbitrator. The arbitrators must be independent and must have had
prior experience of running a startup for at least 5 years or of having invested at least
[INR 100,000] in a startup.
12.3Arbitrators fees will be capped at [INR 15,000], where there is a single arbitrator, or
a total of [INR 30,000] when there is a panel. The arbitrator or the panel must issue a
final decision within 1 month from the date a claim invoking the arbitration clause is
filed.
12.4The courts of [] shall have exclusive jurisdiction over all matters pertaining to this
agreement.
13.

INTELLECTUAL PROPERTY, NON-DISCLOSURE OBLIGATIONS

13.1

Intellectual property in all work that is done by any of the Co-Founders for the
Business shall be exclusively used for the purposes of the Businesses. In case of
retirement of expulsion pursuant to Clause 9 or Clause 10 the outgoing Co-Founder

13.2

An outgoing Co-Founder shall be under an obligation not to disclose information


specific to the business to third parties, without the express written permission of the
remaining Co-Founders.

13.3

During the period of their association with the Business, disclosure to third parties
shall only be made on a need-to-know basis and by subjecting the third party to a
similar obligation of non-disclosure, or on any other basis as agreed by the CoFounders. IN WITNESS WHEREOF the parties have put their respective hands
the day and year first hereinabove written

Signed and delivered by


[Name of the first party]
[Address]
[Email Address]
[Signature]

[Name of the second party]


[Address]
[Email Address]
[Signature]

[Name of the third party]


[Address]
[Email Address]
[Signature]

Witnesses for the Co-Founders:


Name of witness: []
Address: []
Signature: []

Name of witness: []
Address: []
Signature: []

Name of witness: []
Address: []

Signature: []