Defining the relationship between cofounder

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Collaboration among founders is crucial for the successful management of the entrepreneurial project. While the initial relationships between the startup's founding members may be implicitly structured, it is important to officially define the rules as soon as possible to establish long-term organizational frameworks among the partners.

Defining the relationship among partners helps to:

➡️ Clarify roles, responsibilities, and contributions to avoid misunderstandings and potential conflicts ;

➡️ Anticipate various scenarios that they may encounter and protect the interests of each party in case of disputes, resignation, bankruptcy, etc ;

➡️ From a legal standpoint, defining the distribution of power among partners allows for determining the rights of the partners and the conditions associated with them during entry, throughout the duration, and upon exit from the company.

1️⃣ Take the time to define the expectations and contributions of each founder

2️⃣ Implement "best practices" to limit risks

The shareholders' agreement should be seen as an insurance policy.

It helps to:

• Define the relationship between shareholders and specify mutual commitments.
• Determine the operating rules of the company (voting rights, share transfer, decision-making process, non-compete clauses, exit clauses, etc.).
• Formalize the equity distribution among founders.

This agreement should be signed at the creation of the company because:

• Every moment that passes without this agreement poses a risk.
• It also allows for peacefully resolving issues while everything is going well.

When drafting a shareholders' agreement, the process is not the same as for other legal documents. What is important is the discussions that the shareholders have before signing the document. It is more like couples therapy than a legal exercise! That's why, in my opinion, if you want it to be done properly, it should be done with a third party. Doing it on your own, even with a great template, is pointless; it only gives the illusion of having gone through the exercise when it hasn't been truly done.

Serge Rosenzweig — Business lawyer, member of the Paris and New York Bar Associations, legal expert at EDHEC Entrepreneurs.

3️⃣ Establish formal and regular communication moments among founders, with a dedicated agenda item on interpersonal relationships and the well-being of each individual.

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