Document background
The Founder Stock Purchase Agreement is a crucial document used during company formation or early-stage operations in South Africa, typically when formalizing the equity relationship between a company and its founders. This agreement is essential when founders are acquiring their initial stake in the company, whether through direct purchase, sweat equity, or a combination of both. It must comply with the South African Companies Act 71 of 2008 and related regulations, while addressing key aspects such as share vesting, transfer restrictions, and founder obligations. The document is particularly important for startups and new companies as it establishes clear ownership structures, protects both company and founder interests, and creates a foundation for future investment rounds. It typically includes detailed provisions about share classes, voting rights, anti-dilution protections, and exit mechanisms, all within the context of South African corporate law requirements.
