By Oyetola Muyiwa Atoyebi, SAN, FCIArb (U.K.), Notary Public
Founder disputes can pose as serious a threat to the survival of a startup as inadequate funding or weak market demand. In Nigeria, the incorporation of a company under the Companies and Allied Matters Act 2020 (CAMA) does not automatically settle private arrangements among founders concerning equity ownership, financial contributions, decision-making, intellectual property or exit arrangements.
Where these critical matters are left to informal understandings, disagreements may develop into costly legal disputes, threatening the stability, growth and long-term sustainability of the business.
Against this background, legal expert Oyetola Muyiwa Atoyebi, SAN, has examined the importance of founders’ agreements in Nigerian startups, highlighting the contractual protections entrepreneurs should put in place from the outset.
In his article titled *“Founders’ Agreements in Nigerian Startups: The Contractual Protections Every Founder Should Consider,”* Atoyebi explains that a properly structured founders’ agreement provides a legal framework for defining the rights, responsibilities and obligations of individuals establishing a business together.
The article examines essential contractual provisions, including equity allocation and vesting, founders’ roles and responsibilities, decision-making procedures, intellectual-property ownership, confidentiality obligations, share transfers, exit arrangements and dispute-resolution mechanisms.
It further emphasises the importance of ensuring that these agreements comply with the Companies and Allied Matters Act 2020, the company’s articles of association, the Nigeria Startup Act 2022 and other applicable laws.
Atoyebi advocates the early formalisation of founders’ arrangements as a practical legal safeguard against avoidable disputes, while protecting business interests and strengthening the foundation for sustainable growth.
The article offers valuable legal guidance to startup founders, entrepreneurs, investors and legal practitioners involved in Nigeria’s growing startup ecosystem.
Read the full article here:
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