The Founder Stock Purchase Agreement is a crucial document used during company formation or early stages in Hong Kong, when founders acquire their initial equity stake in the company. This agreement, governed by Hong Kong law, serves multiple purposes: it documents the terms of share purchases, establishes vesting conditions if applicable, and sets out various rights and restrictions attached to the shares. The document ensures compliance with Hong Kong's Companies Ordinance and securities regulations while protecting both the company's and founders' interests. It typically includes detailed information about share pricing, transfer restrictions, repurchase rights, and founder obligations, making it essential for establishing clear ownership structures and preventing future disputes. The agreement often works in conjunction with other corporate documents such as the shareholders' agreement and articles of association.
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1. Parties: Identification of the Company and the Founder(s) entering into the agreement
2. Background: Context of the agreement, including company formation and purpose of the share purchase
3. Definitions: Key terms used throughout the agreement
4. Purchase and Sale of Shares: Core terms of the share purchase, including number of shares, price per share, and aggregate purchase price
5. Closing and Payment Terms: Details of when and how the purchase will be completed and payment made
6. Representations and Warranties of the Company: Company's statements about its authority, share status, and business condition
7. Representations and Warranties of the Founder: Founder's statements about their capacity and eligibility to purchase shares
8. Share Restrictions: Limitations on transfer, right of first refusal, and other restrictions on the shares
9. Company's Right to Repurchase: Terms under which the company can repurchase shares, including upon termination of service
10. Confidentiality: Obligations regarding confidential information
11. General Provisions: Standard clauses including governing law, notices, amendments, and entire agreement
1. Vesting Provisions: Include when shares are subject to vesting schedule rather than being fully vested at purchase
2. Intellectual Property Assignment: Include when founder needs to assign pre-existing IP to the company
3. Non-Competition and Non-Solicitation: Include when additional restrictive covenants are required
4. Tag-Along Rights: Include when founders should have the right to join in sales by other shareholders
5. Drag-Along Rights: Include when majority shareholders should be able to force founders to join in a sale
6. Board Matters: Include when founder is to be appointed to the board or have board nomination rights
7. Employment Terms Reference: Include when purchase is tied to specific employment terms or conditions
1. Schedule 1 - Share Details: Detailed information about the shares being purchased, including class, rights, and numbers
2. Schedule 2 - Vesting Schedule: If applicable, detailed vesting terms and timeline
3. Schedule 3 - Deed of Adherence: Form of deed to be signed by founder agreeing to company's shareholders' agreement
4. Schedule 4 - Share Transfer Form: Standard form for executing the share transfer
5. Schedule 5 - Capitalization Table: Company's share capital structure pre and post-purchase
6. Appendix A - Board Resolutions: Copy of board resolutions approving the share issuance
7. Appendix B - Shareholders' Agreement: Copy or key terms of the existing shareholders' agreement
Authors
Relevant legal definitions
Clauses
Relevant Industries
Technology
Financial Services
E-commerce
Healthcare
Manufacturing
Professional Services
Media and Entertainment
Real Estate
Education
Consumer Goods
Biotechnology
Clean Energy
Software Development
Retail
Relevant Teams
Legal
Corporate Secretarial
Compliance
Finance
Executive Management
Board of Directors
Corporate Governance
Investment
Relevant Roles
CEO
Company Secretary
Chief Legal Officer
Corporate Lawyer
Compliance Officer
CFO
Founder
Co-founder
Legal Counsel
Corporate Governance Officer
Board Director
Managing Director
Investment Manager
Startup Advisor
Company Director
General Counsel
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