Structuring relations between business owners, developing a comprehensive corporate agreement (shareholder agreement), creating and improving mechanisms aimed at protecting the interests of o

When creating a gambling project, it is necessary to establish a legal entity in the chosen jurisdiction. Therefore, business owners need to resolve corporate issues: which legal entity model to choose, how to conclude an agreement between the founders. These issues are most relevant when establishing, since they directly reflect the relationship of the founders among themselves, the procedure for distributing profits and their responsibility, as well as relations with counterparties. You can read about the possible options for the design of these relations in this article.



Choosing the organizational form of a legal entity when creating a gambling project

Although the legislation of different countries provides for some peculiarities, it is possible to identify universal models that are found in almost every jurisdiction. The choice should be based on the business plan. The development goals of the gambling platform also predetermine the chosen form. For example, a partnership is not suitable for a large business, and a limited liability corporation is the most flexible form, suitable for both a small start-up business and an expanded company. In any case, it will be possible to think about reorganization, i.e. change of organizational form.  

Partnership to create a gambling project

It is quite simple to create a partnership, but the main feature of partnership is the personal participation of the founders in the implementation of activities. Depending on this, there are:

  • General partnerships in which everyone participates on an equal footing;
  • Limited partnerships, in which investors are distinguished who are not directly involved in the activity and whose liability is limited.

It is unlikely that this form will be suitable for creating a gambling project, so it is worth considering others.

Limited liability of the founders of the gambling project

This is the most common form of a limited liability corporation, LLC. In the event that the debts of a legal entity exceed certain criteria established by law, the founders will still be liable within the value of their shares. In such a model, founders do not have to sacrifice all of their property in the event of a project failure. Along with the limitation of personal liability, another advantage is the absence of strict formalities in the corporate structure. For example, a board of directors is optional in this model.

A gambling project as a corporation 

The corporation is suitable for large business, where several members of the corporation, including investors, many employees, and the structure of the business is quite complex. In this case, it becomes more difficult to tax first the income of the corporation, and then the dividends of the shareholder.

Agreement between the owners of a gambling project - shareholder agreement

This agreement establishes the role of the founders, their rights and obligations, so if you want to provide for a different model than in the legislation, or to clarify it, then it is necessary to conclude such an agreement. 

When is it worth concluding a shareholder agreement for the founders of a gambling project? 

Such an agreement is confidential and may be concluded in non-public companies. Although it is optional, it reduces the likelihood of conflict between founders, as more situations will already be resolved.  

What should be included in the agreement between the founders of a gambling project? 

The following provisions can be included in the shareholder agreement:

  • Procedure for adding new members;
  • Shareholders' rights and the procedure for receiving dividends;
  • Procedure for exercising the preemptive right;
  • Procedure for exercising shareholders' rights to information;
  • Procedure for excluding shareholders from the corporation.

Thus, corporate relations reflect many issues of future relations between the founders of a gambling project. The most popular form is the form limiting the personal liability of participants (LLC). An agreement between the participants of a gambling project should be concluded if the founders want to settle situations that are not provided for by law. Our team of A4 Law Firm lawyers will help you choose the most suitable corporate model for your gambling project.


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