Founder Capital and Shareholder Agreement Checklist
A new business can begin with a handshake, informal family funding and unclear ownership, then discover those gaps when profits, losses or a founder exit. A founder-capital file records who contributed what, which rights were issued and how Shariah and South African legal requirements are coordinated.
This checklist is general information, not legal, tax, financial or Shariah advice. Company, partnership and funding structures require current professional advice.
1. Identify every founder
Record full legal details, role, time commitment, existing obligations and any restriction affecting participation. Separate a founder, employee, lender, adviser and investor; one person may hold more than one role, but the documents should distinguish them.
2. Define each contribution
List cash, equipment, intellectual property, customer relationships, premises and promised work. Record value, transfer evidence, conditions and the date the business may use the contribution.
3. Decide whether money is equity or debt
State whether each amount buys ownership, is a shareholder loan, Qard or another approved arrangement. Record repayment, profit, loss and security terms. Avoid calling money a loan in one record and capital in another.
4. Issue ownership correctly
Align the founder agreement, company records, securities register and beneficial-ownership information. Record voting, economic rights and any vesting or repurchase terms. A spreadsheet alone does not create valid ownership.
5. Allocate profit and loss
For a partnership or Musharakah-based arrangement, document the adopted Shariah rules and legal drafting for profit allocation and loss. Avoid guaranteeing a founder’s capital or return without qualified review.
6. Set decision rights
List reserved matters, spending limits, bank authority, hiring, borrowing, contracts and related-party transactions. Record quorum, voting and deadlock procedures before disagreement occurs.
7. Protect intellectual properFirst annual review
Compare the signed formation documents with actual contributions, bank movements, ownership records, founder roles and related-party transactions. Correct differences through lawful resolutions and professional advice. Update the cap table, beneficial-ownership records and continuity plan instead of allowing informal changes to become the operating reality.ty
Identify names, domains, software, content, designs, data and methods created before and after formation. Use written assignments or licences and record who owns improvements.
8. Manage conflicts and related parties
Require disclosure where a founder, family member or related company supplies goods, lends money or competes. Record approval and market evidence for material transactions.
9. Plan founder departure
Define good- and bad-leaver events, valuation, payment terms, restraint advice, client handover and access removal. Coordinate death and incapacity with the estate and business-continuity plan.
10. Record tax and payroll setup
Confirm registrations, remuneration, dividends, contractor status, VAT and recordkeeping with qualified advisers. Do not postpone basic records until the first return is due.
11. Apply Shariah governance
Record prohibited activities, financing limits, contract review, bank and investment policy, purification and the person responsible for escalation. Keep the methodology and advice date.
12. Close the formation file
Store incorporation documents, founder and shareholder agreements, registers, funding evidence, IP documents, tax setup, bank mandates and the first board decisions together.
Official starting points
Practical outcome: the founders should be able to prove contributions, ownership, decision rights, funding terms, Shariah controls and the process if a founder leaves.
