Founder disputes over shares, intellectual property, investment commitments, and exit mechanisms from the venture.
The agreement that holds the venture together
A founders' agreement is the constitution of the relationship between the venture's partners: allocation of shares and their vesting, roles and powers, intellectual property, decision-making mechanisms, non-compete, and separation and exit mechanisms. When the agreement is breached, or when there is no agreement at all, the entire venture is at stake: investors flee a company with an open founder dispute.
The common breaches
A founder who abandons the venture and demands to remain with all of his shares (in the absence of a vesting mechanism, a claim that is difficult to neutralize); a founder who simultaneously develops a competing venture or takes the intellectual property with him; failure to register intellectual property in the company's name, code, patents, and brand that remained registered to a founder; breach of investment and role commitments; and dilution and allocations contrary to the agreement. The intellectual property issue is the most critical: a venture whose technology is "captive" in the hands of a departing founder is paralyzed.
The legal tools
Enforcement of the agreement mechanisms: vesting, compulsory purchase, rights of first refusal; urgent injunctions against competition and against use of intellectual property; claims to transfer intellectual property to the company; and compensation claims. In the absence of a written agreement, one relies on company law, oppression, unjust enrichment, and duties of good faith, possible, but immeasurably more expensive and slower than a good agreement.
Representation in founder disputes
Israel Arama represents founders and companies in founder disputes: urgent remedies, intellectual property battles, and separation agreements. If the partnership is falling apart, act before the code, the customers, and the brand walk out the door.
The agreement that holds the venture together — what is important to know?
A founders' agreement is the constitution of the relationship between the venture's partners: allocation of shares and their vesting, roles and powers, intellectual property, decision-making mechanisms, non-compete, and separation and exit mechanisms. When the agreement is breached, or when there is no agreement at all, the entire venture is at stake: investors flee a company with an open founder dispute.
The common breaches — what is important to know?
A founder who abandons the venture and demands to remain with all of his shares (in the absence of a vesting mechanism, a claim that is difficult to neutralize); a founder who simultaneously develops a competing venture or takes the intellectual property with him; failure to register intellectual property in the company's name, code, patents, and brand that remained registered to a founder; breach of investment and role commitments; and dilution and allocations contrary to the agreement. The intellectual property issue is the most critical: a venture whose technology is "captive" in the hands of a departing founder is paralyzed.
The legal tools — what is important to know?
Enforcement of the agreement mechanisms: vesting, compulsory purchase, rights of first refusal; urgent injunctions against competition and against use of intellectual property; claims to transfer intellectual property to the company; and compensation claims. In the absence of a written agreement, one relies on company law, oppression, unjust enrichment, and duties of good faith, possible, but immeasurably more expensive and slower than a good agreement.
Representation in founders' disputes — what is important to know?
If the partnership is breaking up, act before the code, the clients, and the brand walk out the door.
This information is for initial orientation about the service and contact process. It is not individual legal advice.
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