Potential investors do need to have a critical eye and do their due diligence to inspect books of accounts, and at that time you would want every document to be satisfactory and proper. Litigation certainly is the death of young businesses in many ways and you don’t want to fight a legal battle over an ill-drafted document. Don’t shy away from taking help of top startup advocates in India .
Documents Required by Startups in India
There are a plethora of documents which are needed to be drafted at the time of Incorporation. Amongst the most important and core documents are Articles of Association(AoA) and Memorandum of Association (MoA) which must be drafted by an expert because these documents act as the constitution of the company.
These documents are going to eternally be the sole paper responsible in setting ground rules that will govern how company functions, the appointment of directors, procedure for board meetings and the rights and restrictions that will attach to each class of the company’s share amongst various other functioning of the company.
You just simply can’t mess with the AoA and MoA as the objects for the company set out therein along with certain declarations with respect to paid-up capital etc are all made in stone once the documents are finalised by the registrar of companies. It becomes crucial to hire a startup lawyer near you to take of the legalities involved.
Startup Agreements in India
The moment your start-up has more than one owner, you will need to decide the following:
- who are equity shareholders,
- what are their voting rights,
- how important decisions would be made,
- how capital would be raised,
- how will shareholders exit,
- whether you require pre-emption rights or not.
Documents needed for Incorporation
- Always ensure you have a cofounders agreement in place. Even if you and your co-founders are best buddies you need to have a cofounders agreement if you want to be taken seriously. Also, no investor will entertain you if you don’t have one. Remember, a business is a business, do not mix it up with friendship.
does exactly what the name suggests, probably it will be the most important contract you will enter into amongst the initial team of the start-up, after all its about ownership. You surely don’t want it to be legally challenged in courts and cause a tussle between stakeholders.
Various other documents like
which govern the relationship between you and your employee also requires special attention.
is a document which safeguards you from disclosing your secrets must be drafted by an expert to remove any loopholes.
Intellectual property assignment agreement , Vendor Agreements , , , also require an expert's help.
Documents needed Post-Incorporation
The Government of India has recognised the need to help nascent businesses by launching the This initiative promotes start-ups and has given many exemptions and tax holidays. According to this initiative, a startup can avail income tax exemption for a period of 3 years as well as tax exemptions from capital gains and investments above Fair Market Value. The conditions that startups need to qualify in order to leverage these exemptions are:
- The incorporation date and the date of applying for the exemptions should not be more than 7 years.
- The business must be incorporated as a Registered Partnership, Limited Liability Company or Private Limited Company.
- Turn over in any year should not have exceeded 25 crores.
- The startup should not have been formed by splitting or reconstructing an existing business.
Not establishing a solid legal foundation may curb your momentum or corrode your start-up capital. Entrepreneurs are people of action and it is ideal for anyone looking to give life to their ideas to seek the required legal help. When it comes to business things cannot be done personally.