Document background
The Founders Stock Agreement is a crucial document used when establishing a new corporation or formalizing the relationship between existing founders in Canada. It becomes necessary when two or more individuals join forces to start a business and need to clearly define their equity ownership, responsibilities, and rights. This agreement typically comes into play during or shortly after incorporation, when initial shares are being issued and the foundation of the company's governance is being established. The document incorporates specific Canadian legal requirements, including compliance with the Canada Business Corporations Act or provincial equivalents, securities regulations, and tax considerations for Canadian Controlled Private Corporations (CCPCs). A properly structured Founders Stock Agreement helps prevent future disputes by clearly documenting vesting schedules, transfer restrictions, and exit provisions, while also protecting the company's intellectual property and confidential information.
