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Corporate Law

I'm starting a new startup with a cofounder. Do I need to also create a shareholders agreement or is a company constitution enough?

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Sushant Bharti

I'm on a 50K & 100X journey

If it's just two of you then you need not worry about creating a shareholding agreement. The partnership deed is sufficient enough to cover it in a simplistic way i.e. 50:50 or whatever ratio you two chose.

However, if there're going to be numerous co-founders with split of roles and responsibilities then having a shareholding agreement could be helpful down the line.

Is there any specific information you're looking at? Feel free to reach out.

Answered over 9 years ago

Samer Hamadeh

Successful Serial Entrepreneur. EIR Lightspeed.

You need to sign a shareholders' agreement, addressing the following topics:
1. Minimum # of hours each founder is required to work each week.
2. Overall duties each founder will perform.
3. # of shares each founder gets.
4. Vesting schedule for each founder (tied to the # of hours worked).
5. Side projects, if any, each founder can undertake, including any boards each founder can sit on.
6. How much each founder can spend without approval from the other founders.
7. What level of hire each founder can make without approval from the other founders.
8. Under what circumstances a founder may be terminated from the organization.
And many more issues so as to avoid as many misunderstandings as possible in the future.

Answered over 9 years ago