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just so hello sir i will just give you a brief introduction then we can begin okay so for uh good evening everyone for today's session um uh we have niraj sir here with us he is a member of bar council of uh delhi and sir advises startups and structuring funding and compliance requirements choosing appropriate legal structures the registration and licensing conducting legal audits before funding or acquisition drafting and reviewing contracts agreements advisory on employment laws ipa and data protection dispute resolution and tax session so i welcome sir for uh taking this session over to user thank you mom and supreme incubator i hope you all can hear me and also see me so i i am a corporate lawyer and i essentially practice in bangalore i'm stationed in bangalore and partner with the singing associates and handle the corporate portfolio from our bangalore office and today the topic for discussion is a founder's agreement and the way to go about it the blueprint that a founder agreement should have and what is the critical aspect or what is the importance of having a founders agreement for a startup or for that matter any organization where a different people come together to start a new venture so i also have a powerpoint to engage some of you in reading other than just listening to me so uh the way we have structured it we'll i'll i'll speak for uh some 20 to 25 minutes and run you through the slides uh throw some ideas on different clauses of founders agreement uh the reasoning behind different clauses the approaches and also share some of the experiences and would i would like them to uh expect questions from uh most of you so that if you have any doubts any concerns any queries with respect to founders agreement that can be addressed so i'll just open the slides for everyone's benefit so i hope you all can see the yes okay great so the fundamental question that comes is why why do we need a founder's agreement is there a legal necessity to have this uh does the companies that for that matter any other act or policy dictate to have this strongest agreement so the simple answer is no there's no such law or section or provision that demands you to have a founder's agreement it is generally prescribed so it is a prescriptive document for the benefit of the founders or the partners the promoters who are coming together with different mindsets approaches and with a concrete business plan they try to arrive at uh i would say a meeting ground and then start on with their business to understand different nuances to have mutuality of purpose to have uh so as to say uh to be on the same page the way we generally say in the business language so it it it provides that platform to all the partners to throw their ideas about what they think the business to be as what is the purpose what is the vision how they would want to run the business and then agree with all the remaining partners and record that in the founders agreement so that there is a sink a synchronization between all the interested parties here so the way it functions and the the timeline wherein the founders agreement should typically fit is something that is very critical very important so when you have an idea you first try to understand with uh whether that has business potential or not and the moment you understand the business potential of an idea you try to find people who have similar vision who are uh who are aligned or who are interested in understanding your idea and move forward with you to implement this potential business and then together with the uh people of similar uh understanding you start preparing a business plan so you start thinking as to how best the idea can be developed how best the idea can be implemented grown into a successful business opportunity in that process you also try to understand what each partner would bring to the table what would be their roles and responsibilities how would they be helping in managing the entity that would be created to carry this idea forward and the best document to record that would be the founders agreement then you enter into a founders agreement sign them sign it and make it binding uh for your for yourselves then you think of the initial capital that would be necessary to execute the plan and then you incorporate the entity after taking the right consulting consultation from the experts be it a cacs lawyer depending on the expertise in their areas understand the way forward in terms of compliances regulatory uh the taxation aspect and also what you are getting into and what would be the exit strategy if you do not want to move forward after some time and then you start the execution of the plan now if you see the scheme of things founders agreement should ideally be executed before you even start your entity but is that a fundamental rule again uh that that is something which should be followed but uh what we have seen or i have seen in my experience so far that is not generally followed amongst the startup groups so what they try to do is once they get into the [Music] the stage of implementing their business plan and setting up the entity that would effectively uh implement their business idea they think of having a founder's agreement in place or an arrangement or an agreement uh between the founders before they invite a third party sometimes uh in their life cycle they never had or do they never think of having any founders agreement but this is something which is very crucial for successfully running the company without any tussle between the different partners and how it can be handy will will see that in the subsequent slides so when you try to implement the idea it is very important to understand the regulatory process as to what kind of regulations what kind of compliances attract when you say would want to implement the idea in the form of a company in the form of an llp or a proprietorship or a partnership so that that aspect should be very clear if you would want to invite uh funding from outside india then what are the hurdles uh say like if you incorporate a one person company there would be restriction of getting the fdi or uh will it will will the iep that you would have in the company uh will not be eligible to be licensed outside india or any other jurisdiction so what kind of strategy or regulatory aspects that needs to be taken care of is something that is very important and preliminary you should understand the legal implications depending on the nature of business so say if you want to start something related to agriculture so that sector is not very open so you want to understand the various nuances associated with it and what are the legal hurdles legal impediments and what are the options that are legally provided to various players who want to enter into that line of business what would be the cost of compliance of that line of business and what kind of entity you should have and how the business should be structured so as to minimize the tax implication whether in terms of direct taxation implication or gst or other indirect taxation and the best way to do that is to engage the right consultants and seek right counsel it can be your ca it can be your cs it can be your lawyers ah depending on the nature of advice that you need if you want advisory on the numbers on the compliances related to tax filings then your ca would be your best council best advisor or a tax lawyer if you want to understand the compliances regulatory aspects then either a cs or a corporate lawyer would be your best shot and in order to understand the agreements the documentation and other processes again a corporate lawyer would be your best consultant so it is also very important to understand who would be the right consultant just a lawyer may not be the right choice because you also need to understand what kind of lawyer the individual is if he is a ip consultant then he would only be equipped to advise you on the ip space if he is not advising in the tax side then despite being a corporate lawyer he cannot give you the right advice in tax area so you should be very careful while choosing the right consultant for you so that you get the right advisory this is very critical then you incorporate the terms of founders agreement into the articles of association now that's what you do so most of you if you understand the scheme in which uh these startup business functions you get investments and when you get investments there is something called investment agreement or shareholders agreement now that agreement per se is impossible against the parties and the company also remains a party to that agreement but what additional step parties do generally is they take out the terms of that shareholders or investment agreement and they incorporate them into the articles of association so this happens when a third party enters into the company here we are talking about founders and if they have a founder's agreement they may as well incorporate the terms into the articles so that is something that can be done and should be done to make that a culture of the company the ethos of the company so that everybody is aware it's transparent and even third parties who have access to this articles it's a freely available public document so they can understand how the company is functioning then defining the ip intellectual property of the company and transferring them to the entity it is also very crucial and any services or products that any of the founders have individually developed should again be assigned to the entity now i why i'm asking or suggesting that okay you define your id transfer it to the entity the services or products that you develop individually you should transfer to the entity all these aspects enriches they enrich the company the entity that you incorporate because ultimately any any business also requires valuation any business also requires its assets to function to attract further investments or track further business and all these iep or services or products develop the moment they become part of the entity it adds to the assets of that company and the valuation increases and it is very crucial for the parties for the founders to record the consent to any future transfers of their shareholding their ownership rights to third parties who would be involved in this business at a later point of time so these are certain critical aspects to implement the business idea that founders have now when you have the idea and when you want to draft the founders agreement at any stage it is very important to understand and discuss and align yourself towards your goals what are the key aspects of things that you would want to achieve and why do you want to have this started what is the essential purpose of having this structure what are you trying to offer which is not already there in the business scene or business environment how different you are what is the critical or i would say important aspect of this idea that will uh attract the attention of people what would be the initial product or services that you want to offer and after the initial phase how you're going to scale it up so the brainstorming with respect to your business idea needs to go through all these questions with respect to all the partners so that you are aligned you record everything in your discussions you understand what would be the vision statement because when you start you may be one person two people or three people or a team of five but then you gradually start adding people and you need to be on the same page to motivate anybody you add to your team to implement those ideas so you need to have the vision statement to motivate those guys to work in the line in the path that you have envisioned and you want to push them towards that path to achieve the desired goals to achieve the purpose for which you have set up the startup what what is the value system with respect to the way you want to conduct the business the way you want to treat your hr the way you want to treat your customers or business counterparts so you you have to create that value system and uh it also includes with respect to how you would want to interact with the government authorities how do you want to interact or portray your startup your business to uh into outside world to anybody outside your um your your company so that it becomes very important because that that's the image that you are giving to any third party and it becomes very important as to how you would want to establish that and that idea that how should be very clear from day one sometimes it grows the ideas they change gradually uh with more experience more exposure uh but the the value system should be there the system should be there the process should start from day one and once you start scaling up once you uh once you have people and once you have their contributions in mind okay what are the roles and responsibilities of different people and how they are going to contribute towards implementing this business idea and making it a successful venture how would you measure that success with respect to each of the different functions that you have so this this aspect the measurement of success becomes very important because the way you grow the definition of success may vary but the way people brings their skill sets their experience their aspects into the business changes their perspective changes about the business so say if i am a marketing guy and i joined a new line of business i have no clue about that line of business maybe because that line of businesses has been started for the first time in the relevant market so how will i design the marketing strategy for that business so i'll start using whatever experiences i already have whatever ideas i've gathered from my experiences in different companies and firms i've worked with and if they work in the new organization well and good so the trial and error method will continue till i get the right guidance or the right formula to market the product but if the founders have concretized their vision because you should not be thinking in a different tangent all together from what other partners are thinking that oh i i expect maeras to bring not only the legal expertise but should also have the financial contribution in terms of managing the finances of the company but neeraj has no finances to contribute to the business so that aspect should be very clear that sync between the partners is very important so it is advisable to have that in writing and the chartered document to govern business relationship you it is very important to understand as to the how documents the article of association is drafted to um so by charter document means the main or the most important document which defines the relationship between the people so here even though friends are coming together or people who know each other are coming together to do this business there should be a separate document to define their business relationship to govern their business relationship various all the aspects of business relationship and it would be very important to have this so uh what aspects it should cover like defining the management process what kind of organization organization structure you you would want to create how people would conduct themselves in the organization and how would you want to conduct yourselves as the bosses policies of the company how how would the company of the firm would uh conduct itself what would be the policy guideline will it be people driven will it be process driven how will you define the processes will you create sops for everything will you have softwares for everything how how would you decide what cost aspect will go into each bracket how would you phase it out so although all those things with respect to management process should be discussed decided thought through and recorded decision making who would take decisions how decisions will be taken will you divide different departments for yourself so if you are an mba would you take care of the management or administration of the business if you are an engineer will you only focus on developing the product or you would put on multiple hats and take care of multiple divisions or functioning core areas of the business how will you induct new members and for what areas so if you don't understand how the hr functions you would need somebody to do that for you and then you may guide the vision you may give them the vision you know you may give them the guidance as to what kind of people you're looking for for your organization but then the internal processes of hr is something that you may not be aware of or you would not want your time to go into that space and what would be the exit mechanism say one one of the partners would want to leave after a few months or years into this new idea and they would want to leave because of some other priority in their lives so what what would be the ideal way of exit a graceful exit for that partner or founder and if that exit mechanism is not defined or if there is a clash of opinion or vision how would you define the dispute resolution mechanism how will you resolve your dispute will you go to what will you want to have arbitration will you want to have a mediation where somebody else is sitting with you listening to your your ranks your disputes and then helping you arrive at a dynamicable solution so defining the mode of dispute resolution becomes very crucial because uh most of the time you want to continue being friends even after you leave the business or you have any differences while doing the business paving ways for future investment and growth what kind of opportunities you would want to create for people to invest in your company how would you want to grow your business how would you want to grow your company so those ideas those aspects should also be captured in this agreement you need clarity to have a clarity to have this aspect from the beginning in the founders agreement confidentiality how uh what kind of business it is how confidentiality plays an important role in keeping your business idea in the closed circle and safeguarded from any i would say any leakage or disclosure outside the parties you would want to review what kind of representations each party is making and what kind of warranties are they providing to each other that becomes very important so to to have an overall understanding of all these aspects you need to have a founder's agreement when you start drafting the founders agreement the first aspect is to have a recital after the name when you write the name found as agreement and then you would want to help the reader understand the background before digging into details as to what the agreement generally contains so you identify all the partners partner a partner b partner b who he or she is and the individual identification uh aspects so if they are they they have a ban mention the pan number their other number passport number define their uh current reciting address the permanent address and so that you you have that confidence that there is mutual kyc so kyt know your partner that that aspect is done define the product and service of the startup how what kind of product or services you would want to have in the startup define that aspect in the recycle what is the intention behind forming the entity so you spell out the intention and define the business concept that you want to implement it is very crucial to note here that where multiple parties two or more parties they enter into an agreement and they are under a mistake as to a matter of fact which is variation essential to the agreement the agreement is considered white why doesn't it you cannot enforce it it is redundant so it becomes very important that the recital records the story of the contract in such a way that it is read and interpreted in the same way to all the parties and even to a third party the way parties have had actually conceptualized that so i shouldn't be interpreting it in a different way it should be written in such an easy language such an easy going language that everybody understands it in the same way so that is very important ownership capital contributions and expenses the defining the basis based on the contribution of money skill time continued participation development the business concept industry experience what would be the percentage of ownership of each of the partners and what would be the vesting process if there is varied percentage so somebody may be a founder with say one person but there are certain western process defined in the founders agreement wherein gradually based on the time or continued participation they're holding may increase so all those aspect needs to be defined in the very beginning in the ownership clauses how how and what would be the contribution of each of the founders whether they'll contribute as equity or they would provide loan or and what would be the limitations in those contributions and what kind of cap you would want to provide in those contributions so that you maintain the percentages of ownership for each formula you need to define the timelines for capital infusion so you may commit to the the infusion the your contribution but you may not define the time and that may be detrimental to the interest of the startup so you need to understand as to how timelines are important and timely contribution would it would be important so any commitment towards capital infusion recorded in this agreement should be well thought through and accordingly timeline should be decided and committed how additional capital contribution would come so all the methods of additional contributions so you'll invite third parties towards shareholding or you'll take loans or whatever aspects you you'd want to include you can you can include in this class what kind of expenses you see so you can have a separate an extra attachment to the whole agreement as to uh in terms of your business plan wherein you can spell out the expenses and how gradually you would need to increase the expenses and how do you how do you need to budget uh the functioning so that you you do not fall in a trap future employee interest so you may add more people in your business and gradually how do you want to give them a sense of ownership in the future so that they say there is an esop scheme there is a stock interest of stock schemes which you may have as a policy in your organization so that gradually the people who have joined you from the very beginning they also start getting sense of ownership with time and become a part of the organization not as an employee but also as owners gradually so that that aspect is very crucial in this class then we have other crucial clauses equity ownership investing so this we already discussed issuance of shares how the shares should be issued to all the uh people different uh the process this regulatory process should be defined what kind of restrictions you would want to have on the transfer or pledge of shares so say one of the partners he's having some kind of a difficulty in economy difficulty and he he wants to transfer selections to somebody else another friend who is willing to give money to him against those shares and become part of this company would you allow that unhurt unhindered or you want to put certain restrictions that no partner can transfer any of his or her shares without seeking approval so those restrictions and the ways to go ahead and actually transfer or pleasure shares should be defined in the settlement how would the management of the entity be undertaken so that aspect would be ceo cfo ceo whatever designations you want to give and ultimately the responsibilities attached to it now these these aspects is also these aspects should be not only understood from the as from the perspective of the management of the company but also the corresponding legal aspects if you are handling finances what kind of legal consequences can be there if there is certain unwarranted act or permission from your side will you be considered officer in default are you a key managerial personnel and you will be implicated in law will you be tried will there be any penalty or there be jail term for that what kind of consequences uh there can be when you become a director of a company or a shareholder of a company and or assume different managerial roles in the company so that aspect should be very clear because there are around 40 different laws that attracts to you the moment you become director of a company and depending on the functioning of the company nature of business and different roles so it is very important to understand what are the don'ts when you become a director and rest all can be do so don'ts are the crucial aspects that one should understand and accordingly design the conduct rules and responsibilities which would be defined very carefully and very meticulously so that there is all the aspects is clear to all the parties who are engaged to act in a specific role their responsibilities are very clear and also the corresponding liability if they do not meet those responsibilities or fulfill those responsibilities there should be proper checks and balances monitoring mentoring and review and those can be linked to appraisals and different other aspects and that's that's how it should be and it should be very transparent it should be there in the agreement itself approval process how any decision would be approved if one of the founders is handling finances will he or she have complete authority on approving any finances or will you define limits you approve anything till 50 000 inr or one like inr if it goes beyond that then you need to discuss with all the founders it will not be a subject matter of gold discussion but all the founders needs to understand so these things can be discussed or defined a process can be prescribed in the founders agreement at the initial stage so that you keep a strict vigil on every aspect of the business and most importantly those aspects wherein you need to take a console related decision an informed decision and nobody none of the partners would act weird remuneration and compensation it is very important to decide and define what would be the remuneration of each of the founders what kind of compensation they would draw month by month or year on year what what aspect of what percentage of that compensation determined and written in this agreement would they actually take out from the company what would what and how much of it they would want to retain in the company which they can take out once the entity becomes profitable so those aspects can also be mentioned in the the founders agreement intellectual property so who is developing intellectual property if there are five power partners five founders but only two are working towards creating vip will the ip rights remain solely with them or you would want the ip to come to the company as well or only to the company and though that ip would be the contribution of those two partners not any money but the other three partners would foot the bill so accordingly you need to decide as to how this ip would figure out in the overall scheme of things and how i ip should be the property of the company confidentiality i already discussed how important confidentiality aspect is and right from the stage one when you have business idea even before discussing your idea with somebody you should have an india in place so that the threat or the fear of your idea being misused or used successfully by somebody else who already is sitting uh with the right kind of environmental money uh is is simply thrown out so it is very important to have the confidentiality aspect in mind and also there in the agreement dispute resolution so there are various methods of dispute resolution you can uh choose the way you would want to resolve your dispute if there isn't if there is any dispute amongst the partners so it becomes very important to define it and initiate the dispute or resolve it as and when it comes following that process exit mechanism for the partner that we already discussed and last but not the least is the boilerplate clauses so boilerplate clauses are the governing law clause which lowered the one year agreement when you would want to have the dispute uh resolution a mechanism to be initiated which uh how would you decide jurisdiction so say if you are in bangalore you want to have the bangalore votes to have the jurisdiction or if one partner is in bangalore the other in delhi how would you define the jurisdiction how would you define different other clauses like uh the waiver the clauses related to force mature like the prove it 19 situation presented to all the businesses uh the the importance of force matured how the the the business was completely shut down from conducting itself and what kind of impact it had on different ongoing businesses ongoing contracts wherein there was a clock sitting on the contract and in absence of an effective force major clause what kind of implications the parties of those agreements had so it becomes very important to have minutely drafted clauses boilerplate clauses the standard clauses to understand how and when they become important they assume importance like the payment of stamp duty or how the counterpart clause how many original versions of the implement you need to have who will keep that original version if there are three parties and you want to have only one original then where that original agreement be and how how the other parties essentially have a visibility that original agreement is accessible to them as and when they want so it becomes very important to have these aspects covered in the founders agreement so i think with this i end this presentation and the forum is open for questions so we already got a few questions in uh in the chat should i read it to you for you let me also open it yeah sure so maybe you can start reading so the first question is from samyak jain how do you ensure confidentiality during as well as after exit of founder nda and non-compete are there but they are not foolproof what should be done can you repeat that yeah how do you ensure confidentiality during as well as after exit of the founder okay nda now i can read the question okay i got into chat so essentially how do you ensure confidentiality during as well as after exit or founder okay nd and non-compete are there but they are not full proof what should be done would appreciate your suggestion on this okay now this is this is very important to understand as to how confidentiality works confidentiality is something which works not only during the dependency of the contract during the term of the contract but you define in the contract that how it can work continue to be operative or enforceable after three months or six months or one year or three years of the contract so that aspect should be defined in the contract or the confidence confidentiality agreement depending on the nature of the confidential information and nda and non-compete indian and non-compete are totally different aspects india is non-disclosure agreement so it is non-disclosure of confidential information non-compete is not competing with your business so non-compete is governed under section 27 of the indian contract act and since it is a restrictive covenant non-compete and non-disclosure both are restricted permanent but since the disclosure of confidentiality confidentiality confidential aspect can be your proprietary information information which is proprietary to you it can be your trade secret and which may or may not be ip as well so it becomes very important uh from the understanding of the contract law that this aspect is exception to the restrictive covenant so this is something which can be enforced if you want somebody to not disclose your confidential or proprietary information that is something that you can enforce and have a successful enforceable clause drafted in the contract but when it comes to non-compete non-content is something which is not generally enforceable why because it is restricting the right of livelihood now there can be multiple strategies to make it enforceable like paying a non-compete fee and minimizing the scope of non-compete so that you are not attacking the right to livelihood of the person against whom this non-complete agreement will work so i agree non-compete is not a full proof strategy but it has its own deterrent effect but nda is a full proof strategy now the second question that i see is what is the best time to sign and execute a founder's agreement so this is something which we discussed it is generally before you start your entity so the meeting of mind and all the discussions all the questions should be thrown to each other before you start the entity you should have it drafted sign and execute the foundation and what factors can be considered to ensure equal distribution of equity now that is something that you can record in the agreement and the equal distribution of equity depends on what each party is bringing to the table if you want equal distribution the contribution should also be equal and it cannot be equal if there is unequal contribution by members hello hello hi hi uh neil uh firstly thank you so much for a very very insightful and comprehensive explanation i just wanted to follow up on the question uh this particular question how to divide you know ensure equal distribution of equity and as you said very rightly that it has to be on the basis of what a founder is bringing to the table and in terms of qualitative skills are there any best practices for division of this you know because generally at an early stage both the founders you know in a typical scenario don't have a lot of capital to bring so they bring their own skill sets or experience or uh you know just general passion for the idea so anyway in that case how we can so any best practices that you've seen to distribute this okay so see like as i said contribution there can be multi different contributions so if i personally become partner in a startup i don't have business experience i'm a lawyer right so what i can do is i can ensure that the business functions in a proper way the regulatory requirements the legal requirements is met right i can even handle the hr functions which is close to legal and i can even try and the administration aspect is something that again can be handled but i can't be involved in product development area in marketing in sales in finance right there i can help support and learn but those cannot be my core areas now what what what is the saving that i am doing to the entity what aspects of the business these functions uh generally cover if we have started a law firm then it covers pretty much most of it right yeah so i'll have a major stake but if it doesn't if it's a manufacturing entity you have to manufacture and sell a medical device then my percentage will come down drastically right so contribution has to be seen from the importance of functionality unless if i want to increase the increase my contribution then the other way of doing it other than just my contribution of my skill is through money so you have you have to decide initially uh based on your business plan what is the initial seed money you need from each of the founders and then method to evaluate how the contribution that each guy is making from his skill or her skill what what how that would be measured okay there are different ways of measuring the those contributions those skills as well you understand what how you can define the percentage or at least cancel them again against each other right the other guy is doing only engineering and i am doing all these five functions based on the cost you cancel each other's contribution and say okay your equity can be decided only on the basis of the money that you are bringing to the table right but that would be true if only two of us are partners if there's a third guy who has no skills who is only bringing money and he wants to sit as a silent partner then the story would be different then the equation between the three would be different right so there are different ways in which parties come together and they contribute so it becomes very important to understand the various nuances the specific aspects of each of these cases would be different okay noted thank you we have some more questions in the chat uh one is from samyak who's asking can we note down all the responsibilities which should be divided among two co-founders and what about functions which do not lie between any of these two founders you know which may be finance or hr who takes them up yeah so as i said uh it is important to note out note down all the functions all the responsibilities amongst say two co-founders three con co-founders you noted down divide between them now there may be there are there not maybe there will always be a lot of areas of functions which may not be your strengths or areas in which you have never worked then you have to mutually decide as to how you will involve a third person as an employee or as an external consultant who can help you in those functions because like finna and such are that they can be outsourced as well right you can understand there are a lot of agencies like before for example if i talk about me hr is something in which we provide training to people okay how to handle the hr functions what kind of documents you should have in place and the every other aspect can be managed internally except for the payroll which again there are payroll softwares or payroll agencies which uh which which can be engaged by any of the startups at a very uh i would say nominal rate and they can they can work on this or engage one person in the company who would undergo this training and report to one of the founders with respect to the functions and do the entire hr or finance or having relevant experience in finance as well as hr and take it up so these aspects should be defined but at the end of the day even if you don't have experience in those areas since you are starting this business you are responsible to make it successful you need to and this is this is something which you should understand that you should be you should not shy away from taking those responsibilities as well but for skills relevant skills you would have to engage somebody from outside or employ somebody to help you out in that process those processes now the next question is what if two founders start the company and after a few months are the founders join on what factors can their compensations take we decide okay so there's something we discussed how how it can be done because this is something uh that would be necessary to define in the founders agreement because when you have defined relationship with each other it will be important to also decide how you would and when you would invite a third person to join you and when that will happen what would be the key principles that you will follow so why am telling principles because it is very important to understand here that whenever a third person joins most of the time they set out the terms and conditions to join you because they are giving you the money so they would want a role in the management they would want a boat seat they would want a lot of things from you right and they would not work as an executive director in the company they would be on the board to just see how is board functioning you're not taking any decision which would be detrimental to his or her interest so it becomes very important to understand what kind of what changes will happen when you invite a third person and how based on the contribution that they are making you'll decide this the uh i would say the stake the shareholding or the the percentage that you do away with from your own uh shareholding right and if you are bringing a third person who would also be part of the company and participate in day-to-day functioning and take salary and compensation then in that case the formula would be same which you applied for yourself but since you have already set up or brought it to some level the shareholding of the new individual would be a bit lesser because the valuation of the company you already have a valuation in place say even if it's six months or ten months or two years old you already have a valuation you have already put in a lot of effort your time energy and resources to bring it to that level to to that position so the contribution of the new person would definitely the compensation would be accordingly a bit lesser to what you guys have been uh getting and in order to quantify that you'll have to see the market standards based on uh the experience level of the person that who is coming based on the area in which the company is operating and the scale of the company so all these factors they go in towards understanding the compensation of a new person who is joining the company now sometimes it is not clear as to how things will unfold how do we note responsibilities in such a case okay now if you don't know future you cannot predict the difficulties that you will face later on so you cannot write down aspects related to that that's why you have a dispute resolution clause because at that point of time if you don't agree or you don't know how to deal with that situation you'll blame each other for not attending to that situation and then there'll be a dispute so you have a dispute resolution clause as far as recording responsibilities uh is concerned the responsibilities would be recorded in different profiles so say somebody is handling operations so if two people are handling operations two founders are responsible for operations or development then there may be discrepancy there may be some difference in the way they approach or if there is a gap if there is a fault if there is some new um unforeseen issue that comes up then there will be discussion or tussle otherwise if you have defined everything related to operation to one person everything left to finance and hr to second person then that person will have to assume all the responsibilities related to that no exception unless he or she is not confident to take a decision with respect to something and would want to discuss so you can create an option when you provide that confidence or that extra step a support to your co-founder that he or she can come up with those issues discuss with other founders and then take a informed decision so that he or she is bringing others into that decision making so that if that situation is new that situation is something never tried and tested nobody has experience so it will be an informed success or an informed or collective success of collective failure and if they think that they cannot take a call they can always go out and take uh outside counsel before taking the call or decision on that aspect so that's how you can i guess fool proof yourself hope that answered your question samia if you have any follow-up you can unmute all these cars okay or does anyone else have any other questions hello yes yeah i have a basic question uh suppose there are two founders are there for any startup or kind of formation of company and basically both of them have divided what he what who will do and maybe agreement has also been made regarding their roles and responsibility but after a few months or maybe after some time if few rivalry responsibilities are given to some third party third party means maybe we have employed someone for those roles and now they are doing those roles and they are doing well is it necessary to uh revise that agreement in which those roles were put in some on some founders previously okay so it totally depends on how the third person is coming on board if he is coming as an employee then of course uh you'll have an employment agreement in place where you you will define the terms and conditions of employment define his or her roles and responsibilities the moment you do that you can have an extra to the existing founders agreement saying that clauses xyz of the responsibilities defined for partner a has now been given to such and such employee under the employment agreement so and so right so you can create that kind of a uh supplementary agreement or an extra to the existing founders agreement so that it is very clear that okay these roles have now been removed from the purview of this specific founder though what you can additionally do is make that founder responsible the reporting person to this new way so that the ultimate responsibility of those functions still stays with that formula if that can be possible otherwise if you are making somebody a third person head of certain department or certain function then of course this exception can be carved out in the supplementary or addendum agreement of the formula okay thank you any further question so if there are no further questions then we shall close the session thank you so much sir for your great insight we hope we can conduct further sessions in future with you definitely thank you so much for having me here and thanks to all the participants for being such wonderful listeners and to those who asked questions i hope i was able to address the existing concerns or any doubts that you all had and in case you have any further question or any doubts you can still reach out to me my details are there with both supreme incubator as well as lawyer or you would have seen in the presentation that i uh presented to you you can reach out to me anytime thank you so much definitely thank you thank you thank you