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Founder Shareholder Agreement

Founder Shareholder Agreement Template for Australia

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Key Requirements PROMPT example:

Founder Shareholder Agreement

"I need a Founder Shareholder Agreement for my Australian technology startup with three co-founders, where we'll need 4-year vesting provisions with a one-year cliff, and specific clauses for protecting our AI-related intellectual property that will be developed starting January 2025."

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Document background
The Founder Shareholder Agreement serves as a critical legal foundation for new companies and startups in Australia. It should be implemented at or shortly after company formation, before any significant business operations commence or external investment is secured. This agreement is essential for documenting the founding shareholders' rights, responsibilities, and expectations, while establishing clear governance structures and decision-making processes. The document typically addresses key aspects such as share ownership, vesting schedules, business operations, intellectual property rights, and exit strategies, all within the framework of Australian corporate law and regulations. It's particularly important for protecting all founders' interests and preventing potential disputes by clearly defining each party's roles, commitments, and the procedures for handling various business scenarios.
Suggested Sections

1. Parties: Identification of all founding shareholders and the company

2. Background: Context of the agreement, including company formation and business purpose

3. Definitions and Interpretation: Key terms used throughout the agreement and rules for interpretation

4. Share Capital Structure: Details of share classes, rights, and initial shareholding allocations

5. Shareholders' Commitments and Contributions: Initial investments, commitments, and responsibilities of each founder

6. Management and Decision Making: Governance structure, board composition, and decision-making processes

7. Reserved Matters: Decisions requiring special majority or unanimous consent

8. Shareholders' Rights and Obligations: Voting rights, dividend rights, and general obligations of shareholders

9. Share Transfer Restrictions: Limitations on transfer of shares and pre-emptive rights

10. Founder Vesting Provisions: Vesting schedule for founder shares and conditions

11. Non-Compete and Confidentiality: Restrictions on competitive activities and protection of company information

12. Intellectual Property Rights: Ownership and protection of company IP

13. Default and Consequences: Events of default and resulting actions

14. Exit Provisions: Procedures for company sale, IPO, or other exit events

15. Dispute Resolution: Process for resolving disagreements between parties

16. General Provisions: Standard boilerplate clauses including notices, amendments, and governing law

Optional Sections

1. Tag-Along and Drag-Along Rights: Used when parties want to include provisions for forced sale or right to join in sale of shares

2. Employee Share Option Pool: Include when the company plans to implement an ESOP

3. Dead Lock Resolution: Specific procedures for resolving deadlock situations, recommended for 50/50 ownership structures

4. Put and Call Options: Include when parties want specific rights to force purchase/sale of shares

5. Foreign Investment Provisions: Required when any founders are foreign persons under FIRB regulations

6. Good Leaver/Bad Leaver Provisions: Detailed provisions for share treatment when founders leave the company

7. Future Funding Provisions: Include when anticipating future investment rounds

8. Founder Earn-Out Mechanisms: Used when founder shares are tied to performance metrics

9. Special Rights for Specific Share Classes: Include when creating different classes of shares with varying rights

Suggested Schedules

1. Schedule 1 - Company Details: Corporate information, share capital structure, and current shareholdings

2. Schedule 2 - Initial Business Plan: Company's initial business strategy and objectives

3. Schedule 3 - Reserved Matters List: Detailed list of decisions requiring special approval

4. Schedule 4 - Deed of Adherence: Template for new shareholders to join the agreement

5. Schedule 5 - Share Vesting Schedule: Detailed vesting terms and timeline for founder shares

6. Schedule 6 - Founder Services Agreement: Terms of founders' service to the company

7. Schedule 7 - IP Assignment Deed: Documentation of IP transfer to the company

8. Schedule 8 - Tag and Drag Along Procedures: Detailed procedures for implementing tag and drag along rights

9. Appendix A - Valuation Methodology: Agreed methods for share valuation in various scenarios

10. Appendix B - Key Performance Indicators: Metrics for measuring founder performance if relevant to vesting or earn-outs

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
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Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Manufacturing

Professional Services

Media and Entertainment

Retail

Education

Real Estate

Biotechnology

Clean Energy

Agriculture

Mining

Construction

Software Development

Consulting

Relevant Teams

Legal

Executive Leadership

Corporate Governance

Board of Directors

Company Secretariat

Risk Management

Compliance

Corporate Affairs

Strategy

Business Development

Relevant Roles

Chief Executive Officer

Company Founder

Co-Founder

Managing Director

Company Director

Chief Financial Officer

Chief Legal Officer

General Counsel

Corporate Lawyer

Company Secretary

Chief Operating Officer

Head of Legal

Legal Counsel

Corporate Secretary

Business Development Director

Startup Founder

Entrepreneur

Legal Operations Manager

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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