How to prepare for the legal purity of a startup?
- Basic documents required to launch a startup
- What points should be written in the charter and corporate agreement?
- Additional documents for a startup
Basic documents required to launch a startup
Creating and launching a startup is difficult in every aspect. You need to find an idea and present it correctly, turn it into a product that will be interesting to the target audience and attract the attention of investors. For example you already have a great idea and strategy for its implementation. Now is the time to start thinking about legal issues. According to statistics, too formal and frivolous attitude towards them is one of the common reasons why new projects stop working. The reason is the impossibility of attracting investments and establishing cooperation with partners due to the inconsistency with their legal requirements.
In order to establish themselves as a reliable promising company, newbies need to properly package their project from a legal point of view. To get started, a startup needs a relatively small list of documents:
- A package of corporate documents (charter, certificate of registration, etc.).
- Confidentiality Agreement / NDA.
- Agreements and acts confirming the transfer of exclusive rights to the product of a startup company.
- A corporate agreement between participants or an agreement on the implementation of activities.
What points should be written in the charter and corporate agreement?
Without any exaggeration, the charter for a startup is the most important legal document. It contains information on the rights and obligations of participants, including powers, profit distribution scheme, procedure for exiting a business and transferring a share from one participant to another person. Also, the charter prescribes the procedure for concluding transactions, the procedure for reorganizing and liquidating the company. In fact, these are the main issues that determine the scope of responsibility of each participant, his competence, property and other rights, agreements between the participants when making large transactions, and the specifics of company management. It is often quicker to make a standard charter, and this is also permissible for a startup, the most important thing, after the company has already been registered, to provide for all the nuances of the participants' interaction on the project with a corporate agreement.
Another important document is a corporate agreement. It is also called the concept agreement for startup founders. If the business is registered in the form of an LLC, then an agreement is concluded on the exercise of the rights of participants. A shareholder agreement is suitable for a JSC.
You can register a business without a corporate agreement, but for security reasons it is still worth thinking about drawing up and signing such a document. It will help prevent conflicts within the company, as it regulates issues related to the implementation of corporate rights by startup participants.
The corporate agreement and articles of association are of immense value for the successful development of a project. At the initial stages, the founders often adhere to a single point of view about solving key problems, but as the business grows and develops, opinions may differ. This leads to divisions and conflicts within the company, which can end the most successful endeavors.
Additional documents for a startup
There is a list of additional documents that we recommend for startups:
- internal labor regulations and job descriptions for staff;
- employment contracts for employees;
- confidentiality agreement (NDA).
Such documentation will help prevent negative legal consequences when working with hired employees. Here's one example. The company hires a designer to create personalization tools or other intangible assets necessary for the development of the project. From a legal point of view, objects created by a specialist are classified as intellectual property. Exclusive rights to the results of creative activity belong to the author, that is, the hired designer. Startup founders can use these products under applicable copyright laws. The designer, as the owner of the exclusive right, can allow or prohibit third parties to use the products of his intellectual activity. If the owners of the company want to get the right to freely dispose of the means of individualization, this must be formalized legally.
Another very common case is litigation between employers and employees. If an employee filed a statement of claim for illegal dismissal, the employer will need to provide documents that confirm the fact that the employee has violated his job descriptions and internal regulations.
Practice shows that not a single company is able to avoid certain disagreements. A competent approach to resolving such issues will allow you to preserve your assets and business reputation, and minimize negative consequences for your business.
The specialists of the law firm A4 Law Firm will help the founders of startups ensure the legal purity and safety of their business when interacting with investors, counterparties and customers.
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