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Founder Equity Agreement

Founder Equity Agreement Template for Canada

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Key Requirements PROMPT example:

Founder Equity Agreement

"Need a Founder Equity Agreement for a tech startup with three co-founders, where I'll hold 40% equity, and the other two founders will split the remaining 60% equally, with a 4-year vesting schedule starting March 2025 and a one-year cliff."

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Document background
The Founder Equity Agreement is a crucial document used during company formation or early stages of business development in Canada. It serves as the foundational contract that governs the relationship between co-founders and their ownership stakes in the business. This agreement is essential when two or more individuals establish a new venture and need to formalize their equity arrangements, responsibilities, and commitments. The document typically includes detailed provisions about share allocation, vesting schedules, intellectual property rights, and founder obligations, all structured within the Canadian legal framework. It must comply with both federal legislation (such as the Canada Business Corporations Act) and relevant provincial laws, particularly securities regulations. The agreement is especially important for protecting all parties' interests and preventing future disputes by clearly documenting the founders' arrangements at the outset of their business relationship.
Suggested Sections

1. Parties: Identification of the founding members and the company as parties to the agreement

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

3. Definitions: Key terms used throughout the agreement

4. Share Allocation: Details of initial share distribution among founders

5. Vesting Provisions: Terms of share vesting, including schedule and conditions

6. Founder Commitments: Roles, responsibilities, and time commitment expectations of each founder

7. Transfer Restrictions: Limitations on the transfer of shares and right of first refusal provisions

8. Intellectual Property Assignment: Assignment of IP rights to the company

9. Confidentiality: Protection of company and founder confidential information

10. Termination: Circumstances and process for terminating founder involvement

11. Dispute Resolution: Process for resolving disputes between founders or with the company

12. General Provisions: Standard legal provisions including governing law, amendments, and notices

Optional Sections

1. Non-Competition: Restrictions on founders engaging in competing businesses, used when specific competitive concerns exist

2. Non-Solicitation: Restrictions on soliciting employees or customers, included when protecting business relationships is crucial

3. Tag-Along Rights: Rights of minority founders to join in sale of shares by majority founders, used in cases of potential future sales

4. Drag-Along Rights: Rights forcing minority founders to join in company sale, included when future exit possibilities are considered

5. Founder Loans: Terms of any loans between founders and company, included if initial capital is provided as debt

6. Special Voting Rights: Any special voting arrangements or veto rights, used when founders have different levels of control

7. Death and Disability: Provisions for handling shares in case of founder death or disability, included for risk management

8. Family Law Compliance: Provisions addressing marriage breakdown implications, included when required by jurisdiction

Suggested Schedules

1. Schedule A - Share Capitalization Table: Detailed breakdown of share ownership and types

2. Schedule B - Vesting Schedule: Detailed timeline and terms of share vesting

3. Schedule C - Founder Details: Specific information about each founder including contact details and role description

4. Schedule D - IP Assignment Details: Specific intellectual property being assigned to the company

5. Schedule E - Company Bylaws: Reference to or inclusion of relevant company bylaws

6. Appendix 1 - Restricted Activities: Detailed list of restricted activities under non-compete/non-solicit provisions

7. Appendix 2 - Form of Share Certificate: Template for share certificates to be issued

8. Appendix 3 - Spousal Consent: Forms for spousal consent to share restrictions where required

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
Relevant legal definitions
Clauses



































Relevant Industries

Technology

Professional Services

Manufacturing

Healthcare

Financial Services

E-commerce

Consumer Goods

Biotechnology

Clean Technology

Education Technology

Real Estate

Media and Entertainment

Software Development

Consulting

Retail

Relevant Teams

Legal

Executive Leadership

Corporate Development

Finance

Operations

Board of Directors

Corporate Governance

Human Resources

Administration

Relevant Roles

CEO

Co-founder

Chief Technology Officer

Chief Financial Officer

Chief Operating Officer

Corporate Lawyer

Legal Counsel

Corporate Secretary

Board Member

Startup Founder

Managing Director

General Counsel

VP of Operations

Head of Business Development

Chief Innovation Officer

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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