Company Law,Limited Liability Partnership,One person company,Partnership,Startups
Laws Relating to Startups in India
11 Oct 2016  |  Views: 180  | 

The Prime Minister Narendra Modi had in his Independence Day speech announced “Startup India “ initiative in 2015. The objective of this initiative is to make India a nation of 'Job creators' instead of being a nation of 'Job seekers'. Fostering a fruitful culture of innovation in the country is a long and important journey which India has taken up to make itself a hub of innovation, design and startup.
Starting a new business involves a number of criteria’s, one such criteria is knowing the correct procedure and laws relating to startups in India. As per new legal norms a business entity is identified as a startup for up to five years from the date of its incorporation which needs to meet following criteria set by DIPP to access government benefits:
1. Its turnover should not exceed Rs. 25 Cr in the last five financial years
2. Its headquarters should be located in India
3. It must work towards innovation , development, deployment and commercialization of new products, processes , or services driven by technology or intellectual property

The legal definition means that sole proprietorship firms cannot come under the startup India scheme. For an entity or business to be termed as startup it must establish itself under either of the following legal framework:
Company’s Act, 2013
Partnership Act, 1932
Limited Liability Partnership Act, 2008

On initiation of an organization the first step should be to decide the type of business that is to be taken up vis-à-vis Public company, private company, one person company so on and so forth. This might seem unreasonable but it goes a long way in deciding the company’s visibility, sustainability and profitability in a long run as different types of business ventures adhere to different set of laws.

These are the following laws that should be taken care of:
1) Tax Laws – Tax laws can be very tricky if not taken care of initially. Every company has to pay taxes at the Central, State and Local level. A good knowledge about the basics of accounting and taxation would be very useful.
2) Security Laws – To be on the list of stock exchange, it is very important to be well updated with the reforms made by Securities and Exchange Board of India (SEBI).
3) Business Finance – It means how a startup manages its financial needs across its life-cycle. It includes everything that is foreign direct investment (FDI), venture capitals, joint ventures, angel investors. This would result to be very profitable for the company.
4) Labour Laws – This is the most important key in the initiation of startup as the staff working for the company should be satisfied. This would bring innovations to the company and in later development the company would also need freelancers and contractors and the rights of these are protected under labour law and moreover a good labour brings productivity to the business.
5) Intellectual Property Laws – If the startups deals with codes, designs or research this is the most important law to be good with. All the IP audits should be updated timely by doing so the Company can file their own claim for patent, trademark, copyright and this will prevent identity theft.
6) Information Technology Law – With growing technology IT laws comes into picture. If the startup deals with software designing or any IT services, there comes bulk of data from the consumer which has to be protected. It also includes digital signatures and e-contracts which has to be protected for the clients privacy electronically. This is where knowledge of IT laws comes into play.
7) Contract Law–No business can grow without signing contracts with others to safeguard the rights of the company to be misinterpreted, a good knowledge of contract law is essential.
8) Settling Disputes– With the increase in the number of disputes, courts have been overburdened with petitions and appeals, hence alternate methods of dispute resolution including arbitration, out of court settlement, negotiations etc have been taken up. These alternate methods are being widely taken up by the emerging companies nowadays as it is a method of saving both time and money.


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