Set up governance
The most expensive disputes in African business happen between founders, family, and early investors — and they all happen because the paperwork was 'going to be sorted later'.
What this step covers
- Founder/shareholder agreement: equity split, vesting, decision rights, exit clauses.
- Director duties, board composition, and a simple decision-making rhythm.
- Conflict-of-interest, related-party, and dividend policies you can actually live with.
The detail
The four documents every co-founded business needs
- Founders / Shareholders Agreement — equity split, vesting, decision rights, exit clauses.
- Articles of Association — share rights, board powers, dividend mechanics (your CR2 is a start, but customise it).
- Employment / Consultancy contracts — for founders drawing salaries or fees from the business.
- IP Assignment — every founder formally assigns IP they created pre-incorporation to the company.
Equity & vesting cheat sheet
| Scenario | Recommended split | Vesting |
|---|---|---|
| Solo founder | 100% | Not required |
| 2 co-founders, equal commitment | 50/50 with tie-breaker mechanic | 4-year vest, 1-year cliff |
| 3+ co-founders, unequal roles | Founder + skill + capital formula | 4-year vest, 1-year cliff |
| Founder + early operator | Founder 70–85% / operator 15–30% | 4-year vest, 1-year cliff |
Without vesting, a founder who quits in month four walks away with their full equity stake — and the remaining founders are left to build the business for their former partner's benefit.
Hold a quarterly board meeting from day one — even if it's just two of you in a café. Document decisions in minutes. Investors and acquirers will ask to see them years from now.
Frequently asked
Do we need a lawyer to draft a shareholders' agreement?+
Yes. Template agreements are a starting point, but the dispute clauses (deadlock, drag-along, tag-along, valuation on exit) need to be tuned to your situation by someone who has resolved them before.
What if my co-founder refuses to sign a vesting agreement?+
That refusal is itself the signal. Have the difficult conversation now, not after the business is worth millions.
How often should the agreement be updated?+
Every time the cap table changes (new investor, founder leaves) or every 24 months, whichever comes first.
The information in this guide is provided for general guidance only and is subject to change. Fees, timelines, and regulatory requirements in Kenya are updated regularly. Before acting, please confirm details with the relevant authority (KRA, eCitizen, BRS, county government, or other regulator) or speak with a qualified MyBiashara advisor. MyBiashara is not liable for decisions made solely on the basis of this content.
