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Co-Founder Agreement
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Under 10 minutes Last updated March 23, 2021 Suitable for all Australian states and territories

A Co-Founder Agreement allows you to set out the equity ownership, initial investments and responsibilities of each Co-Founder.
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Document Overview
Getting together with a friend or two and creating a new business is an exciting time in any entrepreneur’s life. However,
Co-Founders are often so busy building and running their new business that they skip a hugely important step, the Co-
founder Agreement. A Co-founder Agreement is a contract between Co-Founders setting out the ownership, initial
investments and responsibilities of each Co-Founder. This agreement also safeguards you in the case of a dispute, as it can
provide protection to show what the co-founder agreed to.

Use this Co-Founder Agreement if:

You are a co-founder and would like to clearly set out the equity participation in your new business.

If you've registered a Pty Ltd company, this agreement is most likely not appropriate in your circumstances. A
Shareholders Agreement may be more relevant.

What does the Co-Founder Agreement cover?

Co-Founder details;
Project description;
Equity breakdown and initial capital contributions;

Roles and responsibilities of each Co-Founder;

Management and approval rights;
Non-compete, confidentiality and intellectual property; and
Resignation, dissolution and removal of directors.

Other names for Co-Founder Agreement include:

Founders Agreement; and

Hackathon Collaboration Agreement.

What are the best ways to split equity?

 Splitting equity can be a difficult task if you have not done so before. However, it is important to note there is no right or
wrong way to divide equity. Some startups would split the equity Equally, others would negotiate, and few would decide
on launching a successful product. Before coming to a decision, it is essential to fully understand both sides of the
agreement to ensure the best outcome.
Key considerations include:

Ideas and contributions of co-founder(s)

It is important to consider what each founder brings to the business. If one of the co-founder’s brought the original
concept to the table, they might deserve a higher percentage of shares in the company. Long-term contributions, such as
time and quality of work may also be determining factors in the distribution of equity.

Reputation and experience

Being experienced versus a beginner entrepreneur may affect the amount of equity you get. An experienced founder with
an extensive network in the field can be of great benefit to the company (i.e. securing more funding) and deserves more
equity.

What are their priorities?

Are the founders fully invested in the business or are they using this as a stepping stone for their next project? You would
want to make sure your co-founder is focused on your project and not looking elsewhere before determining the division
of equity. Transparency between the partners is essential for the success of the business.

Besides equity, what else do I need to discuss with my co-founder?

Division of equity is one of many items included in a Co-Founder Agreement. Other issues you should discuss would your
co-founder include:
Ownership percentage;
Roles and responsibilities;

Salary;

division of work and commitments;

business vision and goals;

dispute resolution policies;

What happens when one founder leaves;

Sale of the business.

(/) After completing a Co-Founder Agreement, what are the next legal steps?
For a startup to legally operate as a business in Australia, it must be registered as an Australian business (i.e. ABN, TFN, ACN,
GST) and follow the legal requirements in its relevant field. It is advised you consult a legal professional to ensure the
protection your business and comply with the laws.

Key legal considerations for every startup business include:

Business structure

This is one of the most important decision a new business will make. Choosing between the partnership, sole trader, trust,
company or co-operative would have a significant impact on key areas including tax and legal liability. This is a decision
you should be making with a business lawyer to obtain expert advice on the legal structure which will best suit your
business.

Employer responsibility

If your business intends to hire employees, it is important to familiarise yourself with the legal requirements and standards
to ensure compliance and avoiding liability. Key requirements include sick leave, annual leave and superannuation.

Intellectual property

Many startups are created by inventing a product, piece of technology or service. It is important you consider the
intellectual property rights your business wishes to protect. Depending the nature of your service, patents, copyrights and
trademarks are available to protect your intellectual property.

Business terms and conditions

This would act as the legal contract between your business and your customers. It sets out what your business is providing,
how it is provided and how the customers will pay for it. These terms and conditions must comply with Australian
Consumer Laws and contain key terms which cover refunds, repairs and returns.
Other documents you may need:
Shareholders Agreement (https://lawpath.com.au/legal-documents/shareholders-deed-more-than-2-shareholders)

Partnership Agreement (https://lawpath.com.au/legal-documents/partnership-agreement)

Website Development Agreement (https://lawpath.com.au/legal-documents/website-development-agreement)

Document Reviews

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Jwil5423 ★★★★★ · 8 months ago

Helpful
Telarah
The document templates are really helpful to get guidance around agreements and
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contracts.
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James ★★★★★ · 2 years ago

Very useful legal documents for download
Melbourne
Very useful legal documents that are easy understand to populate through their
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wizard.
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Vindaloo
★★★★★ · 2 years ago
★★★★
Easy to use
Sydney
This is a great and easy service for when you need a really basic and quick legal
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document put together.
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Julius Aquino ★★★★ · 4 years ago

★★★★★
Experience was very simple, we were able to create CoFounder agreement in a matter
Review 1 of minutes. Only issue we had was the processing time, i had to actually just click the
Votes 0 download documents to get the agreement docs and print it locally

47 Ratings-Only Reviews

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