Founder Agreements Before Incorporation

What Is a Founder Agreement Before Incorporation

Most teams start working together long before the company exists in the registry. So a founder’s agreement before incorporation is simply the document that catches up with reality. It can list who the founders are, what each person is supposed to do, how equity can be divided, and what happens if someone walks away before there is a real legal entity.

In legal definitions, a pre-incorporation founders’ agreement is a private agreement between future shareholders, signed while the company is still only in a plan. The parties act in their personal capacity but agree that, after company incorporation, key rights and obligations (such as equity, IP, roles, etc.) will move into the new company structure. It does not replace later shareholder agreements, but it is the first written version of “our deal”.

When You Need a Pre-Incorporation Founders Agreement

In the situation when you have more than one real co-founder, you are in the risk zone.

People bring different assets to the table: time, code, designs, contacts, or money. Without a contract, information about who promised what can drift, especially once the product gets traction or outside investors appear. A short-form agreement signed early is often easier than trying to fix expectations later.

IP and ownership are the classic problem areas. One person might hold domain names, a GitHub repository or early designs in their own name. Another may assume they “own” half the idea because they were there from the start. A written deal can state in plain language that these assets will be assigned to the future company, and on what terms. That clarity helps with later funding, IP audits and future tax advantages linked to the chosen structure.

Key Terms in a Pre-Incorporation Agreement

Parties’ Roles and Responsibilities

The contract should stipulate who is actually a founder and what each person is expected to cover for the company: product, engineering, sales, finance, fundraising, intellectual property or something else. It shouldn’t need to read like an employment contract, but it should give a clear picture of who has which function and whether the commitment is full-time or part-time.

Equity Split and Vesting Logic

Next comes ownership. The document can record the basic split and the vesting rules: how long someone needs to stay to earn their shares, whether there is a cliff, and what happens to unvested shares if a founder leaves. These clauses are later mirrored in the shareholder agreement, but it is always better to agree on the logic before any shares exist.

Intellectual Property Assignment

Intellectual property often holds most of the early value. A good contract states that relevant IP (code, designs, content, trademarks, know-how and other) will be transferred to the new company on or shortly after incorporation. The agreement can also confirm that pre-existing work is either owned by the founders or properly licensed, which matters a lot in due diligence.

Decision and Voting Rules

Even before there is a board, the team needs a way to make decisions. The agreement can say which matters need unanimous consent (for example, bringing in a new founder) and which can be decided by majority. It may also name the people who will sign for the first bank account and handle basic admin once the entity is formed.

Templates, Samples and Custom Drafting

Using a Pre-Incorporation Agreement Sample or Template

For a straightforward local project, a well-designed pre-incorporation agreement sample or a short pre-incorporation agreement template is often a good starting point. It reminds the team to cover equity, IP, roles and exits, without forcing them to invent structure from zero.

Accelerators and early-stage programs frequently use such templates as a base for their cohorts.

That said, a template is not a magic shield. It still needs to match your jurisdiction, your cap table and your plans. Simple edits (names, percentages, governing law) are usually not enough if founders already have other companies, side agreements or complicated IP.

When You Need Bespoke Legal Work

Once you add cross-border elements, investors, or more than one jurisdiction for operations, generic language starts to crack. You may need to think about holding structures, different share classes, local employment rules, tax residence, or VAT/VIES aspects for the future group. At that point, working with advisers such as Icon.Partners to customize the text are usually more efficient than trying to force a one-page template to carry all the weight.

From Pre-Company Contract to Company Documents

After incorporation, the pre-company deal should not be forgotten in a drawer. Its core terms are usually moved into the shareholder agreement, articles of association and formal IP assignments. Vesting, transfer restrictions and decision rules are enforced at the company level rather than only between individuals.

This is also the time to align the early agreement with the wider structure: which entity sits where in the group, how profit flows work, which country’s law governs the main contracts, and how reporting and company incorporation choices interact with regulatory requirements and possible tax advantages. A clean transition makes later transactions, from seed funding to exit, much less painful.

FAQ — Founder Agreements Before Incorporation

What Is a Pre-Incorporation Founders Agreement?

It is a contract between future co-founders that sets out roles, equity, IP and decision rules before the company is formed. It captures the main business deal at a time when the legal entity does not yet exist.

Is a Pre-Incorporation Agreement Legally Binding?

If it is properly drafted, signed and consistent with the governing law, it can be binding between the signatories. Some obligations only take full effect after incorporation, but the personal commitments between founders are already in force.

Can a Pre-Incorporation Agreement Template Be Used?

Yes, a template or short sample is often enough for a simple, single-country team. As soon as there are complex IP, investors or cross-border plans, a standard pre-incorporation agreement template should be treated as a checklist, not as the final word.

Who Should Sign Before Incorporation?

Everyone who can be treated as a founder or promised founder-level equity should sign. In some cases, early IP owners or key contributors are also included in the contract, so their rights and duties are clear from the first day.

What Happens to the Agreement After Company Registration?

Once the company is registered, its terms are reflected in shareholder agreements, articles and IP transfer documents. The original contract remains part of the record and helps explain how the cap table and control structure were intended to look at the very start.