Should we draw up an ownership agreement?

Rights, Terms and Privacy

An ownership agreement is an agreement that describes what applies to your cooperation and ownership in the company. If several people start a business together, it is a good idea to enter into such an agreement.

Considerations regarding rights, terms of confidentiality as well as customer and non-competition clauses are some of the things that an ownership agreement can define. And the rules of the game are important regardless of whether you are a private limited company, joint stock company or partnership company.

IDA has an agreement with the Legal Desk online service, which offers IDA members a 20% discount on all business services, including an ownership agreement template.

There is more information about Legal Desk and an ownership agreement template here.

Initial contributions, work commitments and shares

Most importantly, an ownership agreement should include information about the initial contribution made by each individual owner. Contributions include capital, tools and equipment or agreements with customers.

It's a good idea for the owners to agree whether they commit themselves to contributing additional capital, and whether they will act as guarantors for the company's financial commitments. The ownership agreement should also describe the owners' work commitments and roles in the company. The expected work commitment from each individual owner as well as the rights of the individual owner must be defined.

Furthermore, it's essential that the ownership agreement defines what the owners can do with their ownership shares. You have to decide whether the owners should be allowed to mortgage their ownership shares, and if so, what rules apply to such mortgaging. And speaking of shares, another crucial aspect is to value your shares. You may need this valuation if one owner wants to sell his or her shares to another owner.

Selling the business

You should consider whether there should be a (possibly time-limited) sales ban, so that none of you may sell your part of the company to, for example, competitors or others that the remaining owners do not want to bring in as co-owners. By extension, one of the important points in an ownership agreement is competition and customer clauses, as well as whether you can get out of your ownership of the company again.

Do you need to draft an ownership agreement?

If you need to draft and have an ownership agreement reviewed, you can get a discount from corporate lawyers etc. by using one of IDA's discount agreements.

Have you received an ownership agreement?

If you have been presented with an ownership agreement, you have the opportunity to have a review of your ownership agreement in the form of a second opinion from IDA's legal advisers. Perhaps you have received the ownership agreement in connection with you being given the opportunity to buy into a company, if you receive warrants/options, or if you have prepared an ownership agreement with partners in your start-up.

Submit your ownership agreement via My IDA.