Founders' Lock-Up Agreement
Founder shares earned over time, not held from day one.
An agreement that restricts founders (and sometimes early employees) from selling or transferring their shares for a set period, often used around a financing round or acquisition. Investors typically require one to make sure founders stay invested in the company's success rather than cashing out early.
- Business days
- 1–5Business days
- Lawyer reviewed
- 100%Lawyer reviewed
- Surprise bills
- $0Surprise bills
What a Founders' Lock-Up Agreement should include
Vesting schedule — the period and any cliff, applied to shares the founder already holds.
Repurchase right — the company's right to buy back unvested shares if a founder leaves, and at what price.
Leaver treatment — whether the reason for leaving changes the outcome.
Acceleration — whether vesting speeds up on a sale of the company.
Transfer restrictions — the limits on a founder selling before vesting completes.
Interaction with the shareholder agreement — so the two documents do not contradict each other.
When you need one
At incorporation, or as soon as there is more than one founder. It exists for the case nobody wants to discuss at the start: a co-founder leaving early while holding a large block of shares the company can no longer do anything about. Investors ask about founder vesting routinely.
How Ruby drafts it
Tell us what you need
Describe the agreement, your business context, and how fast you need it. A few smart questions, not a legal questionnaire. Your price and turnaround are confirmed before anything starts.
Ruby drafts it
Once pricing is confirmed a qualified Ruby lawyer is assigned to your file, and the first draft is built from your answers and real Canadian statute.
A licensed lawyer reviews every line
A lawyer licensed in Canada reviews and finalizes the document before it reaches you, and writes the plain-language summary that comes with it.
Signed, stored, and yours to revisit
You get the final agreement and its summary, stored so you can come back to it rather than hunting through email for the current version.
The fee is set before any of that starts. Hourly billing moves as scope does; a flat fee is one number, confirmed in writing, that doesn’t change after the work is done. See how Ruby prices agreements.
Or did you mean one of these?
These get confused with a Founders' Lock-Up Agreement often enough to be worth ruling out before you buy the wrong document.
Questions people ask
Because the alternative is worse for everyone who stays. Without it, an early departure leaves a large unearned stake on the cap table, which makes the company harder to fund and demoralises the founders still working.
Four years with a one-year cliff is the common reference point, sometimes with credit for time already served before the document is signed. It is negotiable between founders, unlike an investor-imposed schedule.
No. It deals with one thing — whether founder shares are earned. Decision-making, transfers, deadlock and exits still belong in a shareholder agreement.
Looking for the plain definition rather than the document? See Founders' Lock-Up Agreement in the Ruby legal glossary.
This page is general information about Canadian business law and is not legal advice. Laws differ by province and change over time, and how they apply depends on your circumstances. For advice on your situation, speak with a lawyer licensed in your province.
Need a Founders' Lock-Up Agreement?
Ruby drafts it for a flat $499 CAD, confirmed before any work begins, with a licensed Canadian lawyer on every document.