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Cofounder Departure Checklist

A cofounder exit checklist covering the unvested share buyback, resignations, IP confirmation, account access, the separation agreement and who to tell.

Updated
  • cofounders
  • equity
  • vesting
  • separation agreement
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About this document

A cofounder departure checklist is a list of the legal, equity and practical steps a startup completes when a cofounder leaves. The cofounder departure checklist covers buying back unvested shares, resignations, confirming the company owns the founder's work, removing access, the separation agreement and telling the team, investors and customers.

Start the cofounder departure checklist as soon as a departure is agreed. Before anyone leaves, a partnership agreement or the founders' stock agreements should already set out what happens. The deadline to repurchase unvested shares comes from the founder's stock agreement and can be short, so find that date first.

How to fill it in

  1. Gather the founder's documents. Collect the stock purchase agreement, vesting terms, invention assignment, any founder agreement, the bylaws, investor agreements and the current cap table.
  2. Fill in the equity table. Enter shares held, vested and unvested on the last day, the repurchase price and the repurchase deadline from the stock agreement. Have the board approve the buyback before that deadline.
  3. Close out roles and access. Collect written resignations, remove the founder from bank accounts and systems, and record who removed each access and when. Update the IRS and the state if the founder was listed.
  4. Agree the separation terms. Write down the last day, equity, any payment and the release. Give the founder time to review with their own lawyer, because the company's lawyer represents the company.
Cofounder Departure Checklist

Cofounder Departure Checklist

[Company] · Departing founder: [name] · Last day: [date]

A cofounder leaving is common and survivable when the paperwork is done promptly and honestly. Several items below have deadlines set by your own documents, so read those documents first. The departing founder should have their own lawyer; the company's lawyer represents the company.

1. Gather the documents

  • Stock purchase or restricted stock agreement for the departing founder's shares

  • Vesting schedule, including any acceleration terms

  • Confidential information and invention assignment agreement

  • Cofounder agreement or any written understanding between the founders

  • Bylaws and any investor agreements that mention founders, board seats or transfers

  • Current cap table

2. Equity

Item

Details

Shares held

[#]

Vested on last day

[#]

Unvested on last day

[#]

Repurchase price for unvested shares

[$ per share, usually the original purchase price]

Deadline to repurchase, from the agreement

[date]

Acceleration that applies, if any

[none / describe]

  • Board approves the repurchase of unvested shares before the deadline

  • Repurchase notice delivered and payment made as the agreement requires

  • Cap table updated

  • Any change to vesting or acceleration agreed in writing and approved by the board

  • Any right of first refusal or transfer limits on the founder's vested shares confirmed in writing

3. Roles and authority

  • Written resignation as an officer, effective [date]

  • Written resignation from the board, if a director, effective [date]

  • Removed as a signer on bank and payment accounts

  • Removed as a contact with the state, the tax authority and key vendors

  • If the founder was the company's responsible party with the IRS, new responsible party reported on Form 8822-B within 60 days

  • Officer and director names updated with the state, for example in the next annual report

4. Intellectual property

  • Confirm in writing that all work for the company, including code, designs and domains, is assigned to the company

  • Transfer any accounts, repositories, domains or app store listings held in the founder's name

  • Return or delete company files and devices

5. Access

System

Access removed

By

[Email and calendar]

[date]

[name]

[Code, cloud hosting and passwords]

[date]

[name]

[Bank and finance tools]

[date]

[name]

6. Separation agreement

  • Terms agreed: last day, equity, any payment, mutual release, confidentiality and non-disparagement

  • Departing founder given time to review with their own lawyer

  • Signed by both sides

  • If the founder was on payroll: final pay and any accrued vacation paid by your state's deadline, and health coverage continuation notice sent

  • If the founder is 40 or older and releases age discrimination claims: at least 21 days to consider the agreement and 7 days to revoke after signing

7. Telling people

Who

When

Message

Team

[date]

[the agreed short version]

Investors

[date]

[what changes, and who now owns their work]

Customers, if they worked with the founder

[date]

[their new contact]

Agree the wording with the departing founder where you can. A short, kind and consistent message protects everyone.

Page 1 of 2474 words

Frequently asked questions

What happens to a departing cofounder's unvested shares?

The company can usually buy them back. Founder stock agreements commonly give the company a right to repurchase unvested shares, often at the price the founder paid, within a set period after the founder leaves. If the company misses that period, the right may lapse, so check the exact deadline in the stock agreement.

Does a departing cofounder keep their vested shares?

Usually yes. Vested shares belong to the founder unless an agreement gives the company a right to buy them, such as a right of first refusal when the founder later sells. Any change to vesting or acceleration as part of the exit should be agreed in writing and approved by the board.

Can the other founders remove a cofounder from the board?

Not on their own. In a Delaware corporation, directors are removed by the stockholders, not by the other directors, under Section 141(k). Investor agreements may also control who fills a board seat. Most departing founders resign instead, so collect a written resignation.

Sources

  1. Delaware Code. “Delaware Code Title 8, Chapter 1, Subchapter 4.” delcode.delaware.gov (opens in a new tab)

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