Questions & Answers
Will the Founders Agreement hold value regarding share allocation and vesting over the MoA?
Dear Lawyers,
I plan to have the MoA and Founders Agreement notarized for the LLC, where the Founders Agreement references details regarding share allocation and the vesting period.
The MoA does the same but shows different share allocations and no vesting, as requested by the Free Zone.
If both are notarized, will the Founders Agreement hold value regarding share allocation and vesting over the MoA?
Dear Questioner,
No, the Founders Agreement (FA) will not hold value over the Memorandum of Association (MoA) regarding share allocation and vesting.
The MoA is a legal document filed with the government authorities (in this case, the free zone authority) to establish the company.
It is the primary document that defines the company's structure, objectives, and shareholders. The FA, while important for internal governance, is a private contract between the founders.
If you need further clarification, we will discuss more.
Kindly share your WhatsApp number to proceed with us.
Dear Questioner,
The Founders Agreement may hold value regarding internal governance over matters like vesting periods; however, it will not supersede the Memorandum of Association’s authority concerning share allocations as recognized by external entities such as regulatory bodies.
Thank you for your inquiry regarding the MoA and Founders Agreement (FA) for your LLC!
While both documents can be notarized, the Memorandum of Association (MoA) is the legally binding document filed with the authorities, and in most cases, it will take precedence over any private agreements like the Founders Agreement when it comes to official records.
That said, the FA may still have value between the parties involved, especially if it contains provisions regarding internal matters such as share vesting and allocation.
However, in case of a dispute, authorities and courts typically rely on the MoA for decisions related to shareholding unless specific clauses in the FA are formally recognized and incorporated into the MoA.
It’s crucial to ensure that both documents are aligned to avoid potential conflicts.
I recommend scheduling a consultation to review both agreements and explore options to ensure your FA holds its intended value.
Feel free to reach out to me via WhatsApp, phone, or email. We can discuss this in detail.
Looking forward to hearing from you.
Best regards,
Suhail Rana
