The Co-Founders’ Questionnaire
Written By
Pooja Savla
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SAMPLE RESPONSES
I. GENERAL
| Particulars | Responses | Remarks / Examples |
| Name of the Business | – | – |
| Registered office address (to be skipped if the Business is yet to be set up) | – | – |
| Brief Description of the Business | – | Note: This can be a 2-3 line description of the industry/sector where the Company currently operates and any differentiating factors. |
| Face Value of Equity Shares | – | – |
| Chairman of the Board | – | – |
II. FOUNDERS
| Particulars | Responses | Remarks / Examples |
| Name and Address of the Founders | Founder 1: – | |
| Founder 2: – | ||
| PAN/ Tax Registration Number of the Founders | Founder 1: – | |
| Founder 2: – | ||
| Founders who are a party to a pre-existing Shareholders Agreement (if any) | – | |
| Monetary Contribution of each Founder (if any) | Founder 1: – | |
| Founder 2: – | ||
| Shareholding Pattern of the Founders before the execution of the Co-Founders’ Agreement (to be skipped if the Business is yet to be set up) | Founder 1: – | |
| Founder 2: – | ||
| Shareholding Pattern of the Founders as on the execution of the Co-Founders’ Agreement | Founder 1: – | |
| Founder 2: – | ||
| Maximum amount of financial assistance that can be provided by the Business to each of the Founders during the course of Business | – |
III. DECISION MAKING AND DISPUTE RESOLUTION
| Particulars | Responses | Remarks / Examples |
| Founder whose opinion will hold more weight in case of any conflict with respect to the Business | – | Note: This can be an internal ‘veto’ right granted to one or more Founders, and is extremely customizable to the relationships between the Founders and their responsibilities. For example, one Founder may hold the deciding vote in general or have the final say on specific parts of the business such as design, costs, funding, or hires. |
| How will the day-to-day and major decisions of the Business be taken? | – | Note: Similar to the ‘veto’ mentioned above, this is customizable to match the working relationship between Founders. While one Founder may control day-to-day operations, another may be the decision-maker for the long-term direction. Alternatively, a voting mechanism can be set up for multiple Founders. |
| How will a sale of the Business be decided? | – | Example: To be decided by the Board/mutual agreement of the Founders. In case the parties have executed a SHA, this will ideally also be covered under reserved matters to be taken upon consent from the investor. |
| Dispute resolution in case one of the Founders is not performing his duties in accordance with the Co-Founders’ Agreement | – | Example: To be decided by the Board/such Founder may be terminated upon a simple majority of the other Founders. While this is difficult to account for at an early stage, it’s important to set checks and balances to avoid any disconnect in goals, ideals, and responsibilities. |
IV. EXIT OPTIONS
| Particulars | Responses | Remarks / Examples |
| Procedure to be followed by the Founders in case of resignation | – | Example: Prior written notice of 60 (sixty) days is to be provided to the Company. The Founder may not, in lieu of notice, pay the company his salary for the notice period, and may not also avail leave. |
| Can any of the Founder’s employment with the Business be terminated in the following situations? If yes, what will be the procedure followed by the Business to terminate such Founder’s employment? | – | Example: (a) For Cause (fraud, negligence, misconduct, crime of moral turpitude, material breach): Yes – the board may terminate the Founder’s employment with immediate effect by simple majority. (b) Without Cause (restructuring, cost cutting, underperformance): Yes – the board shall provide the Founder with an opportunity to present his case and may terminate his employment with 60 days’ notice or relieve him from duties or pay his salary. |
| Procedure to be followed by the Business in case any permanent disability is suffered by any Founder | – | Example: Agreement shall be terminated immediately in case the Founder is unable to perform his duties for a continuous period of 3 (three) months. |
| Would the Founder be obliged to leave his position as a Director on the Board in the following situations? | – | Example: (a) Termination of the Founder’s employment by the Business: Yes (b) Resignation by the Founder: Yes |
| Time period for which the exiting Founders shall be contractually obliged to not work with or as a competitor to the Business | – | Example: 1 year. This restriction, while falling into a grey area in terms of enforceability, is important to ensure that the Company’s confidential and proprietary information doesn’t become available to a competitor (whether directly or indirectly). Considering the goodwill carried by Founders, it is likely that courts will uphold such clauses. |
V. TRANSFER OF SHARES
| Particulars | Responses | Remarks / Examples |
| How will the Founder shares be dealt with in the following situations: (Please provide the details if any buyback options shall be given to the Business or remaining Founders) | – | Example: (a) Termination of the Founder’s employment by the Business: – For Cause: The company shall be entitled to purchase the unvested and vested shares at their face value or such other lower price as may be permissible under applicable law / as determined by the Board / in case of existing SHA, to be dealt with as described in the transaction document. – Without Cause: The company shall be entitled to purchase unvested shares at their face value or such other lower price as may be permissible under applicable law, and the vested shares at the fair market value / as determined by the Board / in case of existing SHA, to be dealt with as described in the transaction document. (b) Resignation by the Founder: The company shall be entitled to purchase unvested shares at their face value or such other lower price as may be permissible under applicable law, and the vested shares at the fair market value / as determined by the Board / in case of existing SHA, to be dealt with as described in the transaction document. |
| How will the market value of Shares be determined in case a Founder wants to sell his Shares? | – | Example: Fair market value / last valued round. |
VI. DISSOLUTION OR SALE OF THE BUSINESS
| Particulars | Responses | Remarks / Examples |
| What will happen to the Intellectual Property of the Business in case of the following: | – | Example: (a) Dissolution of the Business: If any compensation is received from the intellectual property owned by the company, the proceeds will be divided among the Founders in the ratio of their shareholding in the company. (b) Sale of the Business: Remains with the Business. (c) Termination of the Founder’s employment by the Business: Remains with the Business. (d) Resignation by the Founder: Remains with the Business. |
| Who will retain the original brand name of the Business? | – | Example: To be decided at the time of sale as part of negotiation / any Founder having the highest shareholding or who has single-handedly established the brand name. |
Sample Responses
| Particulars | Responses | Remarks / Examples |
| Name of the Business | – | – |
| Registered office address (to be skipped if the Business is yet to be set up) | – | – |
| Brief Description of the Business | – | Note: This can be a 2-3 line description of the industry/sector where the Company currently operates and any differentiating factors. |
| Face Value of Equity Shares | – | – |
| Chairman of the Board | – | – |
| Vesting conditions of each of the Founder’s shares (if any) | – | Example: Vesting conditions may be different for the Founders. This could include yearly, monthly, or quarterly vesting or vesting based on milestones achieved by the Business. For instance:Founder 1: Shares to be vested on an annual basis over a period of 4 years.Founder 2: 40% to be vested upon achieving 50,000 customers and 60% upon 1.5L customers.Founder 3: 25% to be vested on [date], and 75% monthly over 3 years. |
| Roles and Responsibilities of each Founder | – | Example:Founder 1: CEO, Head business development, investor relations, B2B sales, sourcing components, legal/compliance.Founder 2: CTO, OS/Apps/Cloud, overall product security. |
| Time and commitment to the Business expected of each Founder | – | Example: Founder 1: Full-time.Founder 2: Part-time (can also specify hours per day or days per week). |
| Which Founders hold a position of Director on the Board? | Founder 1: – | |
| Founder 2: – | ||
| Remunerations including salary, bonus, commission, etc. (if any) of each Founder | Founder 1: – | |
| Founder 2: – | ||
| Whether the Founders’ rights shall be inheritable? If yes, will the successors of the Founders have the same rights as such Founder or merely be Shareholders in the Business? | – | Note: While employment contracts are personal in nature, some Founders may choose to name successors to take over in their stead. Further, as shareholders, Founders are required to name nominees in case of death or disabilities. |
About the Author
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Link copied to clipboard!https://treelife.in/legal/the-co-founders-questionnaire/
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Pooja Savla
Senior Associate | Transactions | [email protected]
Specializes in transaction advisory, including mergers and acquisitions, investment structuring, and corporate legal matters. Combines a strong background in law and finance to drive seamless transactions and business growth.
We Are Problem Solvers. And Take Accountability.
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