Pre Incorporation Agreement

A pre-incorporation agreement, also known as a pre-incorporation contract, is an agreement made between individuals who intend to establish a corporation. This document specifies the terms and conditions of their partnership and outlines their responsibilities and obligations before the corporation is legally formed.

This agreement is necessary for small business owners who want to form a corporation and are looking to share ownership, responsibilities, and profits. A pre-incorporation agreement is a crucial document that protects the parties involved and establishes the foundation for a successful business.

The pre-incorporation agreement typically includes the following essential elements:

1. Name and Purpose of the Corporation

The agreement lists the proposed name, the purpose, and the scope of the corporation. It also outlines the kind of business activities the corporation will engage in and any limitations it may have.

2. Partnership Structure

The partnership structure is outlined in the agreement, which includes profit-sharing, voting rights, and decision-making power of each partner. The agreement also specifies the capital contributions, liabilities, and responsibilities of each partner.

3. Ownership Percentage

The agreement indicates the ownership percentage of each partner, including the initial investment and additional capital contributions. This section of the agreement must be clear and concise to avoid any disputes down the line.

4. Intellectual Property Rights

This section outlines the intellectual property rights of each partner and the corporation. It specifies who owns the copyrights, trademarks, patents, and other intellectual properties and how they will be used and protected.

5. Employment Agreements

The agreement specifies the duties, responsibilities, and compensation packages of the founders and other employees of the corporation. It also outlines any benefits, restrictions, and policies relating to employment.

6. Dissolution Terms

In case the corporation ends its operations, the agreement specifies the dissolution terms and how the assets will be distributed among the partners.

In conclusion, a pre-incorporation agreement is essential for any corporation to operate efficiently, avoid disputes and provide a clear roadmap for developing a successful business. It is highly recommended to engage the services of a legal expert to draft a pre-incorporation agreement that caters to the needs of all parties involved.