Co-Founder Agreement (Australia)
This Co-Founder Agreement (the “Agreement”) is made on [Effective Date] between:
Founder 1: [Founder 1 Name] of [Founder 1 Address] (Email: [Founder 1 Email])
Founder 2: [Founder 2 Name] of [Founder 2 Address] (Email: [Founder 2 Email])
The Founders are referred to collectively as the “Founders” and the company or proposed company they are building is referred to as the “Company” or “[Venture Name]”.
BACKGROUND
A. The Founders wish to build a startup venture together, being: [Business Description].
B. Incorporation status: [Incorporation Status].
C. The Founders wish to set out in writing the terms on which they will work together, divide equity, manage the Company, and resolve disputes.
NOW IT IS AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement:
- “Business” means the business described in the Background section.
- “Business Day” means a day that is not a Saturday, Sunday, or public holiday in [Governing State].
- “Corporations Act” means the Corporations Act 2001 (Cth).
- “Founder Shares” means the shares in the Company allocated to each Founder as set out in this Agreement.
- “IP” means all intellectual property rights including copyrights, patents, trademarks, trade secrets, designs, software, and know-how.
- “Vesting Commencement Date” means [Effective Date], or such other date as the Founders unanimously agree.
2. EQUITY ALLOCATION
2.1 Subject to vesting under clause 3, the Founders shall hold equity in the Company in the following proportions:
- [Founder 1 Name]: [Founder 1 Equity %] of the fully diluted share capital of the Company.
- [Founder 2 Name]: [Founder 2 Equity %] of the fully diluted share capital of the Company.
2.2 The rationale for this equity split is as follows: [Equity Rationale].
2.3 The equity split set out in this clause 2 may only be varied by unanimous written consent of all Founders.
2.4 Subject to clause 3 (vesting), the Founders shall cause the Company to issue shares to each Founder reflecting the equity percentages in clause 2.1 as soon as practicable after the Company is incorporated, with the total number of shares and the issue price to be agreed by the Founders at the time of issue.
3. VESTING SCHEDULE
3.1 Each Founder’s shares shall be subject to the following vesting schedule:
- Total vesting period: [Vesting Period].
- Cliff period: No shares vest during the first [Cliff Period] from the Vesting Commencement Date (“Cliff Period”).
- On the last day of the Cliff Period, the proportion of each Founder’s shares equivalent to the Cliff Period divided by the total vesting period shall vest in one block.
- After the cliff: [Vesting Mechanism].
3.2 All unvested shares held by a Founder are subject to the good leaver and bad leaver provisions in clause 7.
3.3 The vesting of a Founder’s shares is conditional on the Founder continuing to actively contribute to the Company in their agreed capacity. A Founder who ceases to be involved in the Company (whether voluntarily or involuntarily) will cease to vest shares from the date of their departure, unless they are a Good Leaver under clause 7.
3.4 In the event of an Exit Event (including an acquisition of the Company or a listing on the ASX), all remaining unvested shares shall vest immediately (“Accelerated Vesting”), unless the acquiring entity assumes the vesting obligations on equivalent terms.
4. FOUNDER CONTRIBUTIONS
4.1 Each Founder’s initial contributions to the Company are as follows:
[Founder 1 Name]: [Founder 1 Contribution].
[Founder 2 Name]: [Founder 2 Contribution].
4.2 If a Founder is providing pre-existing intellectual property as part of their contribution, that IP shall be assigned to the Company in accordance with clause 6 from the date of this Agreement or the date of the Company’s incorporation, whichever is earlier.
5. ROLES, RESPONSIBILITIES, AND TIME COMMITMENT
5.1 The Founders’ roles and responsibilities are as follows:
[Founder 1 Name]: [Founder 1 Role].
[Founder 2 Name]: [Founder 2 Role].
5.2 Time commitment: [Time Commitment].
5.3 Each Founder shall perform their duties in a professional and competent manner, in good faith, and in the best interests of the Company and all Founders.
5.4 The Founders shall review their respective roles and responsibilities at least annually and may, by unanimous agreement, adjust these roles as the Company grows.
6. INTELLECTUAL PROPERTY ASSIGNMENT
6.1 Each Founder assigns to the Company with full title guarantee all right, title, and interest — present and future — in and to the following: [IP Assignment Scope].
6.2 Each Founder agrees to do all things, execute all documents, and give all assistance reasonably required by the Company to register, protect, or enforce the Company’s intellectual property rights assigned under clause 6.1, including providing assistance in patent applications, trade mark registrations, and copyright assignments.
6.3 To the extent that any IP cannot be assigned (for example, due to a pre-existing obligation to a prior employer), the Founder must immediately disclose that IP to the other Founders and must not use that IP in connection with the Company without the prior written consent of all Founders.
6.4 Each Founder warrants that they have not entered into any agreement with any prior employer or other party that would restrict or prohibit the creation, ownership, or assignment of IP in connection with the Business.
7. DECISION-MAKING
7.1 Each Founder may make routine business decisions and enter commitments on behalf of the Company up to [Unilateral Decision Limit] without consulting the other Founder.
7.2 The following matters require the unanimous written agreement of all Founders: [Unanimous Decisions].
7.3 Any decision taken in breach of clause 7.2 shall be voidable at the election of the non-consenting Founders.
7.4 The Founders shall meet (in person, by video conference, or telephone) at least monthly to review the Company’s progress, financial position, and strategic priorities.
8. GOOD LEAVER AND BAD LEAVER
8.1 Good Leaver: [Good Leaver Definition].
8.2 Bad Leaver: [Bad Leaver Definition].
8.3 Good Leaver consequences: [Good Leaver Consequences].
8.4 Bad Leaver consequences: [Bad Leaver Consequences].
8.5 The Founders shall act in good faith in determining whether a departing Founder is a Good Leaver or Bad Leaver. Any dispute about the classification shall be resolved in accordance with the dispute resolution provisions in clause 11.
9. CONFIDENTIALITY
9.1 Each Founder acknowledges that in the course of their involvement with the Company, they will have access to confidential information about the Company’s technology, business strategy, customers, employees, finances, and IP (“Confidential Information”).
9.2 During the continuance of this Agreement and for [Confidentiality Period] thereafter, each Founder shall: (a) keep all Confidential Information strictly confidential; (b) not disclose any Confidential Information to any third party without the prior written consent of all other Founders; and (c) use Confidential Information only in connection with the Business.
9.3 The obligation of confidentiality does not apply to information that: (a) is or becomes publicly known other than through the Founder’s breach; (b) was already known to the Founder prior to disclosure; or (c) must be disclosed by law or court order, provided the Founder gives prompt written notice to the other Founders before making any such disclosure.
10. DISPUTE RESOLUTION
10.1 The Founders commit to working together constructively and in good faith to resolve any dispute that arises under this Agreement.
10.2 If a dispute cannot be resolved by the Founders directly, the dispute shall be resolved by: [Dispute Resolution Process].
10.3 Nothing in this clause prevents a Founder from seeking urgent injunctive relief or other urgent equitable relief from a court of competent jurisdiction.
11. GOVERNING LAW AND JURISDICTION
11.1 This Agreement is governed by and construed in accordance with the laws of [Governing State], Australia.
11.2 Each Founder irrevocably submits to the non-exclusive jurisdiction of the courts of [Governing State].
12. GENERAL PROVISIONS
12.1 Entire agreement: This Agreement constitutes the entire agreement between the Founders with respect to the Company and the venture and supersedes all prior agreements and understandings.
12.2 Amendment: This Agreement may only be amended by a written instrument signed by all Founders.
12.3 Severability: If any provision of this Agreement is invalid or unenforceable, it shall be severed to the extent necessary without affecting the remaining provisions.
12.4 No waiver: A waiver of a right under this Agreement must be in writing. A failure to exercise, or delay in exercising, a right does not constitute a waiver.
12.5 Assignment: A Founder may not assign their rights or obligations under this Agreement without the prior written consent of all other Founders.
12.6 Counterparts: This Agreement may be executed in counterparts (including by electronic signature in accordance with the Electronic Transactions Act 1999 (Cth)), each of which shall be an original and which together shall constitute one agreement.
12.7 New founders: If additional founders are admitted to the Company, they must execute a deed of accession agreeing to be bound by this Agreement on the same terms as the original Founders (with such amendments as the existing Founders unanimously agree).
SIGNED as an agreement on [Effective Date].
SIGNED by [Founder 1 Name]:
SIGNED by [Founder 2 Name]:
Founder 1
________________
Signature
Date: ________________
Founder 2
________________
Signature
Date: ________________
What Is a Co-Founder Agreement (Australia)?
A Co-Founder Agreement in Australia governs the relationship between the owners of a business, including capital, management, profit share, and exit, alongside the requirements of the Corporations Act 2001 (Cth).
In Australia, startup companies are typically incorporated as proprietary companies limited by shares (Pty Ltd) under the Corporations Act 2001 (Cth), registered with the Australian Securities and Investments Commission (ASIC). However, the company may not be incorporated at the time the founders first agree to work together. A Co-Founder Agreement can be entered into before incorporation — addressing the pre-incorporation period and creating contractual obligations between the founders that will be novated to the company once it is formed.
A Co-Founder Agreement differs from a Shareholders Agreement in that it is designed specifically for the early-stage startup context. It addresses the unique dynamics of founding teams: the unequal contributions of different founders (some may bring technology or IP, others may bring capital or business relationships), the risk that a co-founder may leave early without having contributed meaningfully to the company's success, the need to confirm that the company owns all intellectual property created by the founders, and the importance of clearly defining each founder's role and decision-making authority.
Australian accelerators — including StartupAUS programs, Startmate, Antler, and university-based incubators — strongly recommend that founding teams have a Co-Founder Agreement in place before applying for or accepting investment. Venture capital funds and angel investors will scrutinise the founders' agreement as part of their due diligence and will require the agreement to contain appropriate IP assignment, vesting, and good/bad leaver provisions before making an investment.
The legal framework governing the Co-Founder Agreement (Australia) in Australia draws on several key statutes and regulatory bodies. Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Parties executing a Co-Founder Agreement (Australia) in Australia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Corporations Act 2001 (Cth) sets the foundational requirements.
When Do You Need a Co-Founder Agreement (Australia)?
A Co-Founder Agreement is needed as soon as two or more people agree to build a startup together and one of the following occurs: they begin working on the venture in a serious capacity; one founder contributes IP, code, or other valuable assets to the venture; the founders approach investors or apply to an accelerator program; or the founders are ready to incorporate the company.
The most dangerous time to be without a Co-Founder Agreement is the early stage, when founders are working on the venture without any formal legal framework and before any value has been created. This is because the most common and damaging disputes between co-founders tend to relate to issues that arise at the outset — equity allocation, who owns the technology, and what happens when one founder decides to leave.
Common scenarios in which a Co-Founder Agreement is urgently needed include: a technical founder and a business founder who are building a product together and need to document their equity split and contributions; two or more friends who are building a startup on the side of their existing jobs and need to address what happens if one of them is offered a full-time role elsewhere; founders applying to join an accelerator or pitch to angel investors, who will require the founders to have a written agreement in place; a solo founder who is bringing on a new co-founder and needs to document the equity split and vesting terms; and any situation where the founders have agreed on an equity split verbally and need to put it in writing before anyone begins to question the arrangement.
The Australia Co-Founder Agreement (Australia) important to execute a Co-Founder Agreement before significant value is created, because the earlier the agreement is in place, the less room there is for dispute about what was originally agreed. Once a startup begins to attract customer interest, investment, or media attention, the stakes — and the potential for disputes — increase dramatically.
What to Include in Your Co-Founder Agreement (Australia)
A thorough Australian Co-Founder Agreement should address the following key elements to protect all founders and the company.
Equity split: The agreement must clearly document the equity allocation between the founders, including the percentage each founder is entitled to upon full vesting. The rationale for the equity split should also be recorded to prevent future disputes about whether the allocation was fair.
Vesting schedule with cliff: A vesting schedule is arguably the most important element of a Co-Founder Agreement. A standard four-year vesting schedule with a twelve-month cliff protects the company and the remaining founders from the risk of a co-founder leaving early with a large equity stake. The cliff means no equity vests in the first year — a founder who leaves before the twelve-month cliff forfeits all their shares.
IP assignment: Every Co-Founder Agreement must include a thorough IP assignment clause. Under Australian law, IP created by an individual belongs to that individual unless there is a written assignment to the contrary. The assignment should cover all pre-existing IP contributed to the company, all IP created during the founder's involvement, future improvements, and associated moral rights waivers under the Copyright Act 1968 (Cth).
Roles and contributions: The agreement should clearly define each founder's role, title, areas of responsibility, and minimum time commitment. It should also document the non-cash contributions (sweat equity) each founder is making, including any IP, customer relationships, or prior work product contributed to the venture.
Good and bad leaver provisions: These provisions determine what happens to a departing founder's unvested — and in some cases vested — shares depending on the circumstances of their departure. Good leaver provisions protect founders who leave for reasons beyond their control; bad leaver provisions protect the company and remaining founders from founders who leave voluntarily or for cause.
Non-competition and confidentiality: Restraint provisions prevent a departing founder from using their knowledge of the company's technology, customers, and strategy to compete with the company. Confidentiality obligations protect the company's trade secrets after a founder's departure.
Decision-making: The agreement should specify which decisions each founder can make unilaterally, and which require the agreement of all founders — including major financial commitments, hiring decisions, and strategic pivots.
Additional compliance elements for a Co-Founder Agreement (Australia) used in Australia include: Under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission (ASIC) regulates companies and financial services. Section 127 of the Corporations Act 2001 governs company execution of documents. The Australian Competition and Consumer Commission (ACCC) enforces the Competition and Consumer Act 2010 (Cth). The Australian Taxation Office (ATO) administers the Goods and Services Tax under the A New Tax System (Goods and Services Tax) Act 1999. The Federal Court of Australia and Supreme Courts of each state have jurisdiction over corporate disputes. Forms-legal.com provides this template as a starting point for Australia-compliant documentation.
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Reference this free template in an article, syllabus, or research note:
Forms Legal. (2026). Co-Founder Agreement (Australia) (Australia) [Legal document template]. Forms Legal. https://forms-legal.com/australia/business/corporate/co-founder-agreement-australia
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title = {Co-Founder Agreement (Australia) (Australia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/australia/business/corporate/co-founder-agreement-australia}},
note = {Free legal document template. Based on Corporations Act 2001 (Cth)}
}Also available for these jurisdictions:
Frequently Asked Questions
Without a written Co-Founder Agreement, the rights and obligations of co-founders in an Australian startup are governed by the general law of contract, the applicable state Partnership Act (if the founders are operating as a partnership), and — after incorporation — the Corporations Act 2001 (Cth) and the company's Constitution. These default legal frameworks do not address the specific arrangements between co-founders and leave many critical questions unanswered: What happens to a co-founder's equity if they leave after six months? Who owns the intellectual property created before the company was incorporated? What happens if the founders cannot agree on a major strategic decision? A written Co-Founder Agreement answers all of these questions from the outset, reducing the risk of costly disputes that could destroy the startup. Investors and accelerators will invariably require founders to have a written agreement in place before they invest.
Vesting is a mechanism by which a co-founder earns their equity stake over time, rather than receiving it all upfront. In Australian startups, the most common vesting schedule is a four-year vesting period with a twelve-month cliff. Under this structure, no equity vests during the first twelve months. On the twelfth-month anniversary, 25% of the founder's equity vests in one block. After that, the remaining 75% vests ratably on a monthly basis over the subsequent 36 months. If a founder leaves before the cliff, they forfeit all unvested (and possibly all vested) equity depending on whether they are classified as a good leaver or bad leaver. Vesting protects the company and the remaining founders from a scenario where a co-founder departs early but retains a large equity stake that was earned only by showing up for the first few months.
Under Australian law — specifically the Copyright Act 1968 (Cth) and the Patents Act 1990 (Cth) — intellectual property created by an individual before a company is incorporated belongs to that individual, not to the company that is subsequently formed. This creates a significant risk for startups: the core technology or software may be owned by one of the founders personally, not by the company. If that founder later leaves, they could potentially take their IP with them or use it to compete with the company. A Co-Founder Agreement should include a thorough IP assignment clause that transfers all pre-existing and future IP to the company, whether the IP was created before or after the company's incorporation. The assignment should also address moral rights under the Copyright Act 1968 (Cth), which are personal rights that cannot be assigned but can be waived.
Good leaver and bad leaver provisions determine what happens to a departing founder's shares — specifically their unvested shares and, in some cases, even their vested shares. A 'good leaver' is a founder who departs for reasons outside their control or through no fault of their own — typically death, permanent disability, serious illness, or termination without cause. A good leaver generally retains all their vested shares and may receive a buyout of their unvested shares at fair market value, or the unvested shares are simply forfeited without penalty. A 'bad leaver' is a founder who departs for any other reason — including voluntary resignation, termination for cause, or a material breach of the Co-Founder Agreement. A bad leaver typically forfeits all unvested shares for nil consideration and may also be required to sell their vested shares at a discount (for example, at the original issue price rather than fair market value). These provisions are critical for protecting the company and remaining founders from departing co-founders who leave but retain significant equity.
Non-compete clauses in co-founder agreements are enforceable in Australia provided they go no further than is reasonably necessary to protect a legitimate business interest. Australian courts apply the common law restraint of trade doctrine, under which a restraint must be reasonable as to scope, duration, and geography. In New South Wales, the Restraints of Trade Act 1976 (NSW) gives courts the power to read down an unreasonably broad restraint to the minimum extent necessary to make it enforceable. In other states, a restraint that is too broad may simply be void at common law. Courts in Australia generally give more latitude to restraints in commercial agreements (such as co-founder agreements and shareholders agreements) than in employment agreements, because the parties are presumed to be of equal bargaining power. A restraint of 12 months duration covering Australia is likely to be enforceable for a co-founder who had access to the company's confidential information, IP, and customer relationships.
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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