The Co-Founder Partnership Agreement is a crucial legal document used when two or more individuals decide to establish a business venture together in Pakistan. This agreement is essential for startups and new businesses where multiple founders are involved, providing a clear framework for their business relationship. It must comply with the Partnership Act 1932 and other relevant Pakistani legislation, including the Contract Act 1872 and Companies Act 2017. The document typically includes detailed provisions on capital contributions, profit sharing, management responsibilities, decision-making processes, intellectual property rights, and exit strategies. It serves as a preventive measure against future disputes and provides a clear roadmap for the business relationship, making it particularly important in the early stages of business formation.
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1. Parties: Identifies all co-founders entering into the agreement with their full legal names, addresses, and contact details
2. Background: Outlines the context of the partnership formation, business purpose, and shared vision
3. Definitions: Defines key terms used throughout the agreement for clarity and legal certainty
4. Partnership Structure: Details the nature of partnership, ownership percentages, and capital contributions
5. Roles and Responsibilities: Defines each co-founder's specific roles, duties, and areas of responsibility
6. Decision Making: Establishes voting rights and processes for both routine and major decisions
7. Capital and Financing: Specifies initial and ongoing capital contributions, funding mechanisms, and financial obligations
8. Profit and Loss Sharing: Details how profits and losses will be distributed among co-founders
9. Intellectual Property Rights: Establishes ownership and rights over existing and future IP created during the partnership
10. Confidentiality: Defines confidential information and obligations to maintain confidentiality
11. Non-Compete and Non-Solicitation: Specifies restrictions on competitive activities and solicitation of employees/clients
12. Exit Provisions: Details procedures for voluntary exit, forced exit, and buy-out mechanisms
13. Termination: Specifies grounds and procedures for partnership termination
14. Dispute Resolution: Establishes procedures for resolving disputes between co-founders
15. Governing Law: Specifies that Pakistani law governs the agreement and jurisdiction for disputes
1. Vesting Schedule: Used when equity ownership is subject to time-based or milestone-based vesting
2. Death and Incapacity: Include when specific provisions for succession or continuation in case of death/incapacity are needed
3. External Investment: Include when anticipating future investment rounds and related equity dilution
4. Technology Transfer: Used when specific technology or IP needs to be transferred into the partnership
5. International Operations: Include when business operations extend beyond Pakistan
6. Family Members Involvement: Used when family members may be involved in the business
7. Religious Compliance: Include when partnership needs to comply with Islamic banking or financial principles
1. Schedule A - Business Plan: Detailed business plan including market analysis, strategy, and financial projections
2. Schedule B - Initial Capital Contributions: Detailed list of each founder's initial capital contributions (cash, assets, or services)
3. Schedule C - Intellectual Property Register: List of all IP assets brought into or created during the partnership
4. Schedule D - Roles and Responsibilities Matrix: Detailed breakdown of each founder's specific duties and areas of responsibility
5. Schedule E - Vesting Schedule: If applicable, detailed vesting terms and conditions for equity ownership
6. Schedule F - Key Performance Indicators: Metrics for measuring partnership and individual founder performance
7. Appendix 1 - Valuation Methodology: Agreed methods for valuing the partnership for buy-out or exit purposes
8. Appendix 2 - Dispute Resolution Procedures: Detailed procedures for mediation and arbitration
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