What this document covers
Co-founders' details and equity splits
Roles and responsibilities of each founder
Vesting schedule with cliff
IP assignment to the company
Decision-making and voting rights
What happens when a founder leaves
Non-compete and non-solicitation
Confidentiality obligations
Governing law (Companies Act 2015)
Frequently Asked Questions
Why is a co-founder agreement important for a Kenyan startup?
A co-founder agreement prevents the most common and damaging startup disputes: equity allocation disagreements, one founder leaving and retaining a large stake, uncertainty about roles and decision-making, and IP ownership. Most startup failures can be traced to founder conflict — a well-drafted agreement reduces this risk significantly.
Who owns the IP developed before the company is incorporated in Kenya?
IP created before incorporation belongs to the individual who created it unless it is formally assigned to the company. A co-founder agreement should include an IP assignment clause, ensuring all pre-incorporation and during-incorporation work product is assigned to the company.
Is a co-founder agreement valid internationally?
Yes. Co-founder agreements are enforceable across all common law jurisdictions. For startups incorporated in Kenya with founders in other countries, specify the governing law (typically Kenyan law for a Kenyan company) and ensure the agreement complies with the Companies Act 2015.
What equity split is standard for co-founders in Kenyan startups?
There is no legal standard, but equal splits (50/50 for two founders) are common early on. Most experienced advisors recommend differentiating equity based on roles, capital contribution, experience, and the specific idea's origin. Equal splits can create governance deadlock — the agreement should include a mechanism to resolve tied decisions.
What happens to a co-founder's shares if they leave the startup early?
Without a vesting schedule, a departing co-founder retains all their shares — leaving the remaining founders to build a company largely owned by someone not contributing. A co-founder agreement with a 4-year vesting schedule and 1-year cliff means only earned equity is retained on departure. The agreement should also specify 'good leaver' vs. 'bad leaver' treatment.
Is a co-founder agreement enforceable in the UK?
Yes. LegalEase common law co-founder agreements are drafted to principles recognised in England and Wales. UK-specific considerations include compliance with the Companies Act 2006 for share issuance and the requirement to file a confirmation statement with Companies House. For UK-incorporated startups, consult a UK solicitor on share structuring.
Who owns an idea that one co-founder came up with before the company was formed?
The individual who created the idea owns it until it is formally assigned to the company. A co-founder agreement should include an IP assignment clause covering all pre-incorporation work, designs, code, and concepts related to the business — ensuring the company (not an individual founder) owns the core IP from day one.