How important is to have a legal structure for start-ups in India? Introduction

Posted By admin / October 2, 2016 / Corporate, Employment, General Legal, Legal Drafting, Startups / 0 Comments


With ideas to revolutionize and drive to succeed, Start-ups commence their journey to make their niche in business world. Amidst this journey, the most crucial decision for any start-up is to choose the appropriate legal structure that is applicable as well as suitable for their new venture.

Factors that facilitate in making the right decision and requisite legal registrations:-

Listing the complete range of options:

It is extremely vital for a start-up to make a list of options that are available within the legal framework of India. In order to select the apt one, an entrepreneur has to decide on which entity it intends to incorporate i.e.

i) A profit entity i.e. proprietorship, one person company, partnership, LLP, private limited company or a

limited company;

ii) A non-profit entity i.e. A company registered under Section 8 of Companies Act,2013, a trust or a society

iii) A Hybrid structures i.e. an associate or Branch Company or a joint venture company etc.

Requisite Legal registrations:-

After making the decision, the start-up has to analyze the requisite legal requirements that will be applicable on its chosen legal structure and has to plan the effective ways in complying them. It requires them to obtain incorporation services, tax registration, Intellectual Property registration, EXIM licenses, MSME registration Shop & establishment registration, domain registration, ISO Certification etc.

Once the start-ups obtain requisite registration, then these companies can initiate their business operations. Another important area that demands the attention and consideration of start-up companies is to draft business models, hire professionals, formulating & executing agreements, rules, guidelines and contracts.

Requisite legal requirements:-

Start-up companies must ensure that every transaction, agreement, contract or guarantee is in written form and properly drafted, keeping in mind that these agreements comply with applicable laws, the charter documents of the company and contains the discussed conditions with preciseness and carefulness. The list of agreements that needs careful drafting and documentation are Shareholder’s agreement, partnership agreement, JV agreement, Service Agreement, co-founder’s agreement, vendor contracts, term sheets, Memorandum of understanding, Terms of Use, Privacy policy & disclaimer, Non- Disclosure agreement, Licensing agreement, ESOP policy, licensing agreement, Assignment deed, etc.

There is a separate list of start-up’s internal policies and agreements that needs heed and effective drafting which includes Exit Agreement, Employment contracts with employees, offer letter, Non- Disclosure Agreement & Non-compete agreement, freelance agreement etc.

Any start-up company that is looking forward to sustainability and glory must have capital and plan its sources of funding. This is one of the major challenges which pragmatically depend on its chosen legal structure and business model.

Requisite legal regulations:-

The regulatory considerations play a significant role in understanding the options of capital and funding available to start-up companies and also in framing the legally available methods of engagement with the fund-providers.

How ‘MyAdvo’ can help start-ups? can be your one stop destination in providing you the best legal solutions that includes pre-screening specialist law firms and start-up lawyers that can help you fulfill any or all the above-mentioned legal requirements efficiently, help you receive and compare competitive proposals from lawyers near to your work-station, act as a reliable mediator and legal solution providing platform. If you will choose, we ensure you that you will get the best service at less time and lower costs.


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