§ Founder checklist
Self-audit · Ontario · Early-stage founders
A founder’sstructured self-audit.
Twenty-four items across entity, equity, IP, founder agreements, operational templates, and future-proofing. Written as a checklist a founding team can run before a raise, a hire, or a diligence request.
- Sections
- 6
- Items
- 27
- Scope
- Self-audit
§ 00 — How to use this
A list, not advice.
The checklist is a self-audit. Walking through it surfaces the items that are documented, the items that are partly documented, and the items that exist only as a verbal understanding between the founders.
The output is a short list of gaps to close — not a legal opinion on whether the gaps are urgent. Urgency is a function of where the company is in the cycle: a raise, a hire, a partnership conversation, or a separation. A consultation applies that judgement.
§ 01 — Entity and corporate basics
Entity and corporate basics.
The boring infrastructure that has to be right before anything else can be discussed. Diligence will look here first.
Incorporated under the right statute
Federal under the CBCA or provincial under the OBCA. The choice is not just paperwork — it affects governance defaults, residency requirements, and renewal cadence.
Minute book opened and current
Articles, by-laws, organisational resolutions, share certificates, and registers maintained. Investors will ask to see it.
Shares issued to each founder by resolution
Documented at fair value, with payment recorded. Verbal agreements about who owns what are not equity.
Shareholder and director registers accurate
Mismatches between the cap table and the registers slow every diligence process and trigger questions about discipline.
Banking, accounting, and tax accounts separate
Personal commingling is the easiest way to lose limited liability protection and the hardest thing to clean up later.
§ 02 — Equity and vesting
Equity and vesting.
How the equity is split is less important than how the equity is structured to handle change. Vesting is the change-handler.
Equity split documented in writing
Founder equity confirmed in a board resolution and reflected on the cap table — not just discussed.
Vesting schedule with cliff
Standard pattern is four years with a one-year cliff. The cliff exists for a reason: a founder who departs in the first ninety days should not walk away with equity.
Good-leaver and bad-leaver mechanics defined
Termination by the company without cause should not be treated the same as resignation in the first year. Define the categories now, not in the middle of a separation.
Repurchase rights on departure
The company's right to repurchase unvested shares — and at what price — is the practical enforcement mechanism for vesting.
Option pool reserved for the first hires
Even if the pool is small, having a documented pool prevents ad-hoc grants that distort the cap table later.
§ 03 — Intellectual property
Intellectual property.
If the IP is not assigned to the company in writing, the company does not own it. This is the single most common diligence finding for early-stage matters.
IP assignment from each founder to the company
A signed assignment of all IP created in connection with the business — including pre-incorporation work that is being contributed.
IP assignment in every contractor and employee agreement
Standard contractor and employee agreements should include present and future assignment of work product and a moral rights waiver.
Background IP disclosed and carved out
Founder pre-existing work that is not being assigned should be identified and described, not assumed.
Trade-mark availability checked before launch
A clearance search before public launch is far cheaper than rebranding after a cease and desist.
§ 04 — Founder agreement
Founder agreement.
The document that governs the relationship between the people who started the company. It becomes urgent under predictable triggers — incoming capital, role asymmetry, or a second product line.
Founder agreement signed by all founders
Not a draft, not an outline, not a slide deck. Signed.
Roles defined beyond titles
What each founder is responsible for, what each founder decides alone, and what requires a co-decision.
Decision rights for major matters
Capital raises, sale of the company, hiring of senior leadership, and changes to the business model usually require a higher threshold than day-to-day decisions.
Deadlock resolution mechanism
A two-founder company with a fifty-fifty split needs a documented way to break a tie. Mediation, third-director appointment, or shotgun clauses each have trade-offs.
Dispute resolution and exit mechanics
How a founder exits, how their shares are valued, and what notice and process apply. The agreement gets read most carefully on the way out.
§ 05 — Operational agreements
Operational agreements.
The standard documents the business uses repeatedly. Each should exist as a template the team can use without re-engineering it every time.
Standard customer agreement or terms of service
Reviewed for the actual offering — not a template borrowed from a different business with different liability exposure.
Standard contractor agreement
With IP assignment, classification controls, and termination mechanics that match how the business actually engages contractors.
Privacy policy and data handling
Required where personal information is collected. The policy should reflect actual practice, not the practice the business intended six months ago.
NDA template for sensitive conversations
Mutual or one-way as appropriate, with permitted purpose, term, and carve-outs for compelled disclosure.
§ 06 — Future-proofing
Future-proofing.
The items that are not urgent today but will be urgent in six to twelve months. Doing them now is cheaper than doing them under pressure.
Diligence-ready data room
A simple folder structure with the corporate, equity, IP, contracts, and employment documents organised. Not a full virtual data room — a folder.
Capitalisation table maintained on a single source of truth
One spreadsheet or platform — not three versions in three inboxes. Updated after every issuance.
Standard employment agreement template
For when the first hire happens. Hiring on a handshake creates the same problems for an employee as it does for a co-founder.
Exit scenarios discussed at least once
What a sale, a wind-down, or a founder departure would look like. The conversation is harder to have under pressure than at a calm moment.
§ Related
Adjacent work.
§ Apply the checklist
Close the gaps before they become diligence findings.
A consultation walks through the checklist with the specific company in front of us — and identifies which gaps are structural, which are cosmetic, and the order to close them in.
Toronto · Ontario