Document background
The Founder Shareholder Agreement is a fundamental document used when establishing a new company or formalizing the relationship between existing founders in South Africa. This agreement is essential for protecting founders' interests and ensuring clear governance structures from the outset of the business relationship. It typically follows company incorporation and should be put in place before the business begins significant operations. The agreement must comply with South African legislation, particularly the Companies Act 71 of 2008, and may need to address B-BBEE requirements depending on the business sector and scale. Key components include share ownership structures, management rights, decision-making processes, dispute resolution mechanisms, and exit provisions. The document serves as a crucial risk management tool by preventing potential conflicts and providing clear solutions when disagreements arise.
