Rapid and unpredictable technology advancements cause a rise in demand for software products that can be delivered faster, adapt to volatile changes and save cost. Over the years, Agile Software Development (ASD) becomes more suitable as the software process that can cater to those demands while still maintaining the quality desired. With this Agile nature, it is apparent that the team that develops the software product need to have unique features as well. The team should also be formed correctly to gain effectiveness, strong performance and ultimately project success. Ineffective teams can be caused by, among others, conflict, inadequate skillset, unbalanced role assignment, lack of teamwork and non-competent team members. However, by far, the characteristics that need to be considered in forming effective teams are yet to be formalized. Thus, this study aims to identify the necessary characteristics in composing a competent team that is well balanced and can create coherent teamwork. The study involves a qualitative literature review which includes past studies about team formation specifically in the software development domain. The data were collected from online journal databases and analyzed using content analysis. From the analysis, six characteristics together with their attributes were identified as vital in team formation. Another two characteristics were also identified as influencing the sixteam formation characteristics. These findings will need further empirical rigor before they can become a complete Agile Software Development team composition model. This model is believed to assist Agile practitioners in forming effective teams for their development projects.