Founder restricted stock agreement (with vesting).
Restricted stock purchase + reverse-vesting agreement for Indian founders. 4-year vest, 1-year cliff, double-trigger acceleration, good-leaver / bad-leaver mechanics.
When investors put real money into your company, they want to know that the founders cannot walk away on day 91 with their shares intact. The instrument that fixes this is the founder restricted stock agreement — also called a founder reverse-vesting agreement — under which the founder's existing shares are subject to a vesting schedule, and any unvested shares are repurchasable by the company at the original issue price (typically ₹10 per share or face value) if the founder leaves.
This template is the agreement that establishes that arrangement. It is drafted for an Indian Companies Act 2013 private limited company and assumes the founder already holds the shares (post-incorporation) and is now subjecting them to a reverse-vesting schedule. The standard vest is 4 years with a 1-year cliff: 25% vests on the first anniversary of the agreement (or the founder's continuous service start date, whichever the parties pick), and the remaining 75% vests monthly over the next 36 months.
The agreement includes a clear good-leaver / bad-leaver framework. A good-leaver (death, disability, termination without cause, resignation for good reason) keeps their vested shares and the company buys back only the unvested portion. A bad-leaver (resignation without good reason within the cliff, termination for cause, founder competing) is subject to a buyback of both vested and unvested shares at face value or a discounted formula — investors will push hard on this.
Acceleration provisions are double-trigger by default: shares accelerate only on a change of control (Trigger 1) that is followed by termination without cause or constructive dismissal within 12 months (Trigger 2). Single-trigger acceleration is included as an alternative clause that founders sometimes negotiate for the CEO seat only.
The buyback mechanic is structured under Section 68 / 70 of the Companies Act 2013 with the working capital reserve / free reserves source identified, and a board resolution template is appended as Schedule B for the actual buyback execution. This is a scaffold reviewed by Indian VC counsel; founder protections vary deal to deal.
The whole document.
Every clause and schedule shipped in the DOCX. No surprises after you download.
- Parties, recitals, definitions
- Existing shareholding reference and vesting commencement date
- Vesting schedule — 4-year vest, 1-year cliff, monthly thereafter
- Definition of vested vs unvested shares with worked schedule
- Good-leaver definition and consequences
- Bad-leaver definition and consequences
- Buyback mechanism for unvested shares — price, process, board resolution
- Buyback mechanism for vested shares on bad-leaver — price formula
- Double-trigger acceleration — change of control + termination without cause
- Single-trigger acceleration alternative clause (CEO only, negotiated)
- Confidentiality, IP assignment, and non-compete period
- Drag-along consent block
- Tax disclosure — Section 17(2)(vi) perquisite implications
- Buyback execution checklist — Section 68/70, SH-9, SH-10 forms
- Schedule A — vesting schedule worked example
- Schedule B — form of buyback board resolution
Timing and trigger.
Executed by all founders simultaneously with or immediately before the first institutional round closes. Often reset (with credit for service rendered) at later rounds when a major new investor requires it.
The sections it cites.
Companies Act 2013 — Section 56 (transfer), Section 68 (buyback), Section 70 (prohibition on buyback in certain circumstances), Section 88 (Register of Members). Companies (Share Capital and Debentures) Rules 2014 — Rule 17 (buyback of unlisted securities) — SH-9 declaration of solvency, SH-10 register of buyback. Income Tax Act 1961 — Section 17(2)(vi) (perquisite on shares allotted at less than fair value) and Section 47 (capital gains exemption on buyback). FEMA 20(R) for non-resident founder considerations.
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Honest disclaimer: this is a scaffold, not legal advice. It is reviewed by Indian practitioners but every filing should be reviewed by your own counsel before execution.
Documents that travel together.
Shareholders' agreement (SHA) — Indian startup template
Full SHA scaffold for an Indian Companies Act 2013 private limited company — preference rights, ROFR, drag/tag-along, board composition, exit waterfall. Series Seed to Series B.
Term sheet template — Series A
Indian VC-norm Series A term sheet — economics, control, exit, conditions. Drafted from the founder side with investor-standard positions annotated.
ESOP scheme document (Rule 12)
Full Rule 12 ESOP scheme document for Indian unlisted companies — pool authorisation, eligibility, vesting framework, exercise mechanics, exit liquidity provisions.
Questions buyers ask.
Does this match what a typical Indian VC will offer?+
It mirrors the clause set Indian institutional VCs use at the seed-to-Series-B stage — CCPS as the share class, broad-based weighted average anti-dilution, 1x non-participating liquidation preference, double-trigger acceleration. Investor markups will reposition some of the founder-side defaults. The annotations in our template flag the common investor pushbacks so you can negotiate from a position of knowledge.
Can I use this for a Delaware C-Corp instead?+
No — this is drafted for an Indian Companies Act 2013 private limited company. The share class names, the entrenchment cross-reference under Section 5(3), the FEMA pricing clauses, and the Indian arbitration framework are not transferable. For a Delaware structure you'll want a US-counsel-drafted SAFE or NVCA model.
What about FDI route and FEMA compliance?+
The template carries the FEMA-relevant pricing language under the Non-debt Instruments Rules 2019 for non-resident investors, and references the FCGPR filing trigger. Sectoral caps and approval-route conditions vary by industry — you'll need to layer those on top with your own counsel.
Has this template been reviewed by a practitioner?+
Yes. Templates are drafted by our editorial team with input from Indian practitioners across corporate secretarial, valuation, and AIF practice. That said, every filing should be reviewed by your own counsel before execution. This is a scaffold, not legal advice.
Can I customise it?+
Yes — open the PDF in any editor that supports text extraction (Word, Google Docs, Pages all paste cleanly from the PDF), or use it as a structural reference for your own draft. Sections are organised modularly so you can keep what applies, swap defaults where flagged, and slot in your facts. Annotations note which clauses are negotiable and which are statutory minimums you can't drop. An editable .docx version is on the roadmap.
Will the founder be taxed on the unvested portion at signing?+
If the shares were issued at face value to the founder at incorporation (the usual case), there is no perquisite at the time of subjecting them to a reverse-vesting schedule. The buyback of unvested shares on departure is at the original face value, which means no capital gain on the founder. We flag this in the tax block, but a CA review is recommended for any non-face-value cases.
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