Founder disagreements can arise when you least expect them. Maybe your co-founder has a different vision for the business, or perhaps they're dragging their feet on important decisions. Maybe you're clashing over who gets to steer the ship or squabbling about the value of shares. Sometimes there can be a clash of personalities or perceived exclusion.

So, what can you do to avoid these issues?

  1. Nail down your Articles of Association: Think of this as the rulebook for your company. It spells out how things will run and forms a contract between the members of a company (and between each member and the company). You can opt for a standard set of rules or craft your own unique version. These articles give you a roadmap to follow and help keep everyone on the same page.
  2. Get a Shareholders’ Agreement: Although having a shareholders’ agreement isn’t compulsory, it’s a good idea to have one in place. It is a document that governs the relationship between a company’s shareholders and also the company itself. It can cover similar ground to your Articles of Association but adds extra layers of protection. You can provide for situations such as what happens if there’s a deadlock in decision-making, or how to deal with a founder who leaves the company (including what should happen to their shares).
  3. Founder directors – clarity is key: If you or your co-founder are also directors of the company, it’s smart to have a director’s service contract. This spells out your roles, responsibilities, and what happens if someone decides to jump ship.
  4. Know your Rights as a Founder-Shareholder: A disgruntled shareholder can take action under the Companies Act 2006 to protect their interests. This involves petitioning the court for relief, which could result in other shareholders buying you out.

Bottom line? Get your ducks in a row early on. By setting clear expectations and using documentation to your advantage, you can steer clear of nasty disputes down the road. Plus, having these agreements in place can stop someone from dragging you into court over every little disagreement.

For more information, get in touch with our team.

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