Quick answer
A co-founder agreement in India should cover equity split, vesting, roles, IP assignment, confidentiality, access control, deadlock, leaver treatment, and exit. For Indian startups, the agreement should also align with the company's future fundraising path.
At a glance
A co-founder agreement is one of the most important documents in a startup. It records how equity is split, how long founders must stay committed, who owns the IP, how decisions are made, and what happens if one founder exits. The agreement is not about mistrust; it is about giving the company a stable structure before pressure and money create avoidable conflict. At Inamdar Legal, we draft co-founder agreements for Indian startups that are simple enough to use and detailed enough to protect the business. The document should support the relationship, not just describe it.
A co-founder agreement in India should cover equity split, vesting, roles, IP assignment, confidentiality, access control, deadlock, leaver treatment, and exit. For Indian startups, the agreement should also align with the company's future fundraising path.
- Equity split and founder vesting
- Roles and work commitment
- IP assignment to the startup
- Exit, deadlock, and leaver clauses
What Is a Co-Founder Agreement?
A co-founder agreement is a private contract between the founders of a startup. It explains each founder's ownership, role, time commitment, IP contribution, decision rights, confidentiality obligations, exit consequences, and dispute process. For an Indian startup, the agreement is especially useful before incorporation, shortly after incorporation, or before the first serious client, investor, employee, agency, or product launch creates legal pressure.
Equity Split and Founder Vesting
The agreement should explain how equity is split and whether it is earned over time. Vesting protects the business if one founder leaves early while the other continues building. A 50-50 split can work only if the founders also agree on contribution duties, deadlock rules, exit rights, and what happens if one person stops working.
- Equity allocation
- Vesting and cliff
- Good leaver and bad leaver
- Repurchase or buyback logic
Roles, Time Commitment, and Outside Work
Founders should not leave their real roles vague. The agreement should say who handles product, operations, sales, finance, hiring, compliance, or fundraising, and whether outside work is allowed. This matters because founder disputes often start when one founder believes they are carrying the company while another founder still expects equal upside.
- Role allocation
- Time commitment
- Outside work restrictions
- Contribution records
IP Assignment to the Startup
Any code, brand work, content, data, product material, pitch deck, design, domain, social media handle, repository, or client asset created before or during formation should be assigned to the business. Payment or informal understanding is not enough. Investors and acquirers usually care deeply about IP ownership. If the company does not own its product or brand assets, diligence becomes harder.
- Founder IP assignment
- Repository and account control
- Brand and content ownership
- Handover on exit
Decision-Making and Deadlock
A startup needs a way to break deadlocks before they turn personal. The agreement should set out reserved matters, voting rights, founder approval rights, and a dispute path that makes practical sense. Deadlock provisions matter most where founders own the company equally or where one founder controls the product and another controls sales, finance, or clients.
- Reserved matters
- Voting thresholds
- Deadlock resolution
- Dispute escalation
Exit Clauses and Leaver Treatment
The agreement should say what happens if a founder resigns, is removed for cause, stops contributing, becomes unable to work, competes with the startup, or wants to sell their stake. Good leaver and bad leaver rules help avoid emotional negotiation after the relationship breaks down. Exit clauses should also cover confidentiality, non-solicit obligations, IP return, account handover, customer transition, and investor communication.
How It Connects With SHA and Articles
A co-founder agreement should not fight the shareholders agreement or articles of association. If the startup raises funding, founder terms may need to be aligned with investor rights, transfer restrictions, board control, ESOPs, and reserved matters. The cleanest approach is to decide founder economics and IP ownership early, then align later corporate documents around that structure.
When to Review This
- Starting a company with co-founders
- Need equity and vesting terms
- Want IP assignment and exit rules
- Preparing for future fundraising