Document background
The Founder Vesting Agreement is a crucial document used in South African companies, particularly startups and growth-stage businesses, to structure the gradual earning of company shares by founders over time. This agreement helps protect both the company and its stakeholders by ensuring long-term founder commitment while providing founders with a clear path to full share ownership. The document typically implements a vesting schedule with a cliff period, often four years total with a one-year cliff, aligned with international best practices while complying with South African corporate and securities laws. It becomes particularly important when companies seek external investment, as investors often require founder vesting arrangements to ensure key personnel remain committed to the company's success. The agreement must comply with the South African Companies Act and relevant financial regulations while addressing tax implications and corporate governance requirements.
