What are the legal procedure that a startup must take, especially dealing with co-founders ??

Jonathan hi. Each country has its own laws. In your case contact the Corporate Affairs Commission (CAC) - https://www.cac.gov.ng/contact-us/ - which is in charge of implementing the Allied Matters Act (CAMA) in Nigeria . You should consider also to talk this matter with any specialized legal advisor in your country.

In dealing with Co-founders, it is amazing how human change therefore every decision should be pen down and there should "ALWAYS" be an agreement note in order to avoid dangers ahead.

An operating agreement is vital. It is a document not controlled or required by state or federal governments but very important to a company.

It should be a straightforward document the founders can initially draft themselves, addressing such matters as % of ownership, how revenue will be distributed and other general matters, as well as who can commit the company in the form of credit cards, who signs checks on the company account and other administrative matters. Buying out a partner should also be covered.

I have seen many enterprises fail or go through terrifically hard times due to lack of an operating agreement. The parties should sign it after a review by a legal adviser, as Miguel Navarrete has emphases in his comments here. It should then be notarized and made an official part of the company file.

You can download a FREE, generic, operating agreement sample at the BOX "References" cube in the right margin of the site I maintain as an extension of my volunteer work: https://www.smalltofeds.com/

It is for a U.S. based LLC but you could modify it for other types of corporations. Since I have a license to use and provide it to my clients, I do so free of charge. You can feel free to borrow from the sample or supplement it as you see fit. It is fairly comprehensive in order to cover most business situations and there may be elements of the example you feel are not necessary.

Hello Jonathan,

You might want to consider the following:

1. Vision /Purpose

All co- founders must align as to the vision and purpose of the business as well as the nature of business you want to operate. As simple as this may sound, it might lead to a fall out when visions do not align. Every stage of your conversation should be documented for future references.

1. Entity Type Your business goals will determine the kind of business and structure you need to put in place. It could be a partnership or you might choose to incorporate a limited liability company. Each structure has its own pros and cons and attendant legal requirements that ought to be complied with.
2. Ownership/ Liability/Obligations. After the pre-liminary conversation you have with your co-founders, you might want to draw up a partnership agreement, shareholders agreement or any other pre-incorporation agreement that stipulates and clearly states obligations , liabilities and percentage of ownership in the business.

It is important that co-founders agree on issues aforementioned before commencing any business operation.