Can a startup terminate its co-founder without compensation? by @R44D
Answer by Raad Ahmed:
Short answer yes, however as the other posters have indicated this is not an endeavor that should be carried out without legal representation as a misstep in terminating a co-founder without compensation can carry significant legal risk if not conducted properly.
The long answer to this question rests in two areas first it should consider what agreements are currently on hand i.e., are there any agreements which outline the conditions under which a co founder may be terminated, the procedures that must be followed and most importantly does it speak to compensation upon termination. Secondly it should also consider issues of fairness and equity that may be used against you later in court. In light of these considerations think from the perspective of a worst case scenario if you were forced to litigate against the ousted co founder who is now seeking compensation. From this frame it is important to try to head off any avenues for potential legal claims an ousted founder may have either in contract or in equity.
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