Cofounder of a company means what?

The term “co-founder” does not have a statutory definition under Indian corporate law, but in a strict legal sense, a co-founder is generally understood to be someone who has played a significant role in the establishment of a company. However, merely calling oneself a co-founder does not automatically confer ownership rights or entitle one to shares unless such rights are formally recognized in legal documents.

Under the Companies Act, 2013, the ownership structure of a company is determined by the allotment of shares as recorded in the company’s Memorandum of Association (MOA) and Articles of Association (AOA) at the time of incorporation. If a company had shareholders from day one, then only those individuals or entities who were legally allotted shares at the time of incorporation can claim ownership rights. If a person claiming to be a co-founder does not hold any shares or have a contractual agreement acknowledging their role, they cannot assert any legal stake in the company.

Investment is not a mandatory criterion for being a co-founder, but it is often an indicator of involvement. A co-founder may contribute in various ways, such as through capital investment, intellectual property, or business strategy. However, unless such contributions are documented through a shareholders’ agreement, founders’ agreement, or board resolutions, they do not establish any legally enforceable ownership or co-founder status.

The Supreme Court of India, in cases like Narandas Karsondas v. S.A. Kamtam (1977 AIR 774), has upheld that ownership rights over any business entity must be determined strictly based on legal documents and statutory compliance. A mere claim of being a co-founder, without corresponding documentation or shareholding, does not grant any legal status or enforceable rights in the company.

Thus, a peon or any other employee who joined the company on the first day cannot legally call themselves a co-founder unless they hold shares or have been recognized as such in official company records. Any such claim without legal backing could be misleading and might even be challenged under contract or misrepresentation laws if it causes harm to other stakeholders.

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A co-founder is a member of the executive team who played a role in the founding of a company. This person typically works with other founders to create and launch a business. A co-founder usually shares certain responsibilities with the other co-founders.

Thanks for reply sir. But if someone is claiming to be a cofounder in a legal document like FIR but he was just an employee of the company on the day of inception and company alloted shares to few individuals at the time of inception except him, can he claims to be a cofounder of the said company in a court case or FIR filed in his personal capacity?

Can we challegne in the court while filing reply in that case/FIR that he mentioned the word cofounder just to show his high profile status and without consent of the company management?

He has not annexed any document certifying from the management saying he is cofounder of the company . So he may have misguided and suppressed facts to get some advantage 

You have posted a riddle than a query. The facts, as subsequently, elaborated suggests deeper issues. Please post complete facts.

Advocate Visheshkumar has explained. No further explanation in necessary.