diff --git a/spec.md b/spec.md
index 2f8a7ff..d07af05 100644
--- a/spec.md
+++ b/spec.md
@@ -213,4 +213,56 @@ However, infinite types without size *are* allowed:
 This is *not* allowed:
 ```
 &a a
-```
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+```
+
+## module system
+Each file is a "compilation unit"
+
+When compiling a compilation unit, the following inputs have to be provided:
+- any amount of files containing signatures of exported definitions.
+  only definitions of the compilation unit that are in one of the signature files will get exported.
+- any amount of other files containing imported definitions
+
+Note that there is no practical difference between signature and source files.
+
+### Example
+Export signature file `List.li`:
+```
+type List[t] = 'End | 'Cons {head:t, tail:List[t]}
+
+# not providing a function body makes it a function signature definition
+def [t] `a++b`(a: List[t], b: List[t]) -> List[t];
+
+def [t] Match.`a++b`(
+  value: List[t],
+  l: List[t],
+  r: MatchUtil.Var[List[t]]
+) -> Option[{ r: List[t] }];
+```
+
+Import signature file `Option.li`:
+```
+type Option[t] = 'None | 'Some t;
+```
+
+Compilation unit `List.lu`:
+```
+def [t] `a++b`(a: List[t], b: List[t]) -> List[t] {
+  # ...
+}
+
+def [t] Match.`a++b`(
+  value: List[t],
+  l: List[t],
+  r: MatchUtil.Var[List[t]]
+) -> Option[{ r: List[t] }] {
+  # ...
+}
+```
+
+### Notes
+Each compilation unit gets compiled to implementation-specific bytecode.
+
+Templated functions can only be compiled partially during a compilation unit. This will impact compile speeds.
+
+Avoid templated functions wherever possible.
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