A founders’ agreement is the document co-founders sign with each other — not with the company, not with an investor — that turns a verbal handshake understanding into something enforceable. It typically covers who owns what percentage of the company, whether that equity vests over time rather than being handed over all at once, what each founder’s actual role and decision-making authority is, how a disagreement between founders gets resolved, and what happens to a departing founder’s shares if they leave before the company has really gotten anywhere.

Most experienced investors won’t fund a startup that doesn’t have one, because a founder split gone wrong is one of the most common and most avoidable ways a promising company falls apart: two people agree to split ownership 50/50 on a handshake, one of them leaves after eight months for a reason that has nothing to do with the company, and the other is left building for years next to a large, fully-owned, unearned stake held by someone who’s no longer doing any of the work. A founders’ agreement heads this off with reverse vesting — unvested shares return to the company, not the departing founder, if they leave before their vesting period is complete.

It’s almost always drafted right at incorporation, before there’s any real money or traction on the table, because that’s exactly when the hardest questions — who’s really in charge, what happens if this doesn’t work out — are still easy to answer honestly.

🇵🇭 Philippine Example

In the Philippines, a founders' agreement is enforced like any other private contract under the Civil Code's general law on obligations and contracts — it doesn't need to be filed with the SEC to be valid between the founders themselves, though the equity split it describes still has to match what's actually recorded in the company's Articles of Incorporation and stock and transfer book once the corporation is formally registered.

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