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Founder Stock Purchase Agreement

Founder Stock Purchase Agreement Template for India

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Key Requirements PROMPT example:

Founder Stock Purchase Agreement

"I need a Founder Stock Purchase Agreement for my Delhi-based technology startup, where I'm purchasing 100,000 shares with a 4-year vesting schedule starting January 2025."

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Document background
The Founder Stock Purchase Agreement is a critical document used during company formation or early stages in India, establishing the legal framework for founders' equity ownership. It is essential when founders are formally purchasing their initial shares or documenting their equity stake in the company. The agreement complies with Indian corporate law requirements, particularly the Companies Act 2013, and includes crucial details about share class, purchase price, vesting schedules if applicable, and transfer restrictions. This document helps prevent future disputes by clearly documenting the terms of founder share ownership and associated rights and obligations. It's particularly important in startups and early-stage companies where clear equity ownership documentation is crucial for future investment rounds and corporate governance.
Suggested Sections

1. Parties: Identification of the company and the founder(s) purchasing shares

2. Background: Context of the agreement and relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale of Shares: Details of shares being purchased, including number, class, and price per share

5. Purchase Price and Payment: Total consideration and payment terms

6. Closing: Timing and mechanics of the transaction closing

7. Company Representations and Warranties: Company's statements about its legal status, authority, and share capital

8. Founder Representations and Warranties: Founder's statements about capacity, authority, and eligibility to purchase shares

9. Founder Services and Obligations: Commitments regarding employment/service to the company

10. Transfer Restrictions: Limitations on the founder's ability to transfer shares

11. Company's Right of Repurchase: Terms under which company can repurchase shares (e.g., founder departure)

12. Confidentiality: Obligations to maintain confidentiality of company information

13. General Provisions: Standard boilerplate clauses including governing law, notices, amendments

Optional Sections

1. Multiple Closing Provisions: Used when share purchase will occur in multiple tranches

2. Intellectual Property Assignment: Include when founder needs to assign pre-existing IP to the company

3. Non-Competition and Non-Solicitation: Additional restrictions on founder's competitive activities

4. Board Observation Rights: If founder is granted rights to observe board meetings

5. Tag-Along Rights: Include if founders are given right to participate in future share sales

6. Drag-Along Rights: Include if company wants right to force founders to sell shares

7. Family Settlement Provisions: Include when founder's family members need to consent or be bound

8. Foreign Investment Provisions: Required for non-resident founders or foreign investment aspects

Suggested Schedules

1. Schedule A - Share Details: Detailed description of shares including class, rights, and number

2. Schedule B - Capitalization Table: Complete breakdown of company's share capital structure

3. Schedule C - Payment Schedule: If multiple payments are involved, detailed payment timeline

4. Schedule D - Founder Information: Detailed information about founder including background and qualifications

5. Schedule E - Company Information: Key company details including registration, licenses, and material contracts

6. Appendix 1 - Share Certificate: Form of share certificate to be issued

7. Appendix 2 - Board Resolution: Copy of board resolution approving share issuance

8. Appendix 3 - Regulatory Approvals: Copies of required regulatory approvals, if any

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 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

Startups

E-commerce

Financial Services

Healthcare

Manufacturing

Professional Services

Education Technology

Biotechnology

Real Estate

Consumer Goods

Media and Entertainment

Relevant Teams

Legal

Finance

Human Resources

Corporate Secretarial

Compliance

Executive Leadership

Board of Directors

Corporate Governance

Investment

Relevant Roles

CEO

Founder

Co-Founder

Chief Legal Officer

General Counsel

Company Secretary

Chief Financial Officer

Legal Counsel

Corporate Lawyer

Investment Manager

Board Member

Director

Managing Director

VP of Human Resources

Chief Operating 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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