Author - Advocate Venkata Raghavan and Associate Runa Jasia
A startup is the culmination of an idea and the effort to bring it to reality. Considering the time and effort the founding members have invested into it, it is essential to protect the startup legally before expanding.
There are many legalities that affect and can safeguard a startup, and the legal system can be used to create a safety net for growing startups to ensure that during their growth, no legal infractions can create a hassle.
Although to bring an idea to life, one needs a concrete idea and plan to implement it. The plan must include protecting the brand that one is trying to create. Sometimes, many founders undermine the power of protecting their startup. Some essential ways to do so are as follows:
Register your company
It is very important to figure out the type of company the startup will be and register it accordingly. There are various types of companies such as Private Limited Company, Company Limited by Shares, Company Limited by Guarantee, Unlimited Company, One Person Company, Limited etc. It is important to register the company as one cannot own or be a part of a company that does not exist legally. Also, one cannot conduct business on an unregistered company.
As the startup is going to have a certain identity identifiable by a logo, it is important to ensure the founders have the sole rights to it and it cannot be used by any other startups or companies. This creates a unique identity for the startup which the consumers will associate back to the startup and its services. Today, where Google disrupted the market by creating its own unique space the search engine market, people associate searching or finding any information online with Googling. Thus the term “Google it” emerged. This disruptive pattern is something all startups aim for.
It is a unique design that differentiates the goods and services from other brands. Thus, it is very important to register your trademark under the Trademark Act.
You see it’s easy, you don’t need to worry about your brand name after taking the protection measures. You love your company and Its obvious that you won’t take any risk before even establishment of your company into a big platform.
If the startup is co-founded by more than one founder, it is advisable to have a Founder’s Agreement between them to outline the variants and functions between them. As it is always said, put it in writing. This is a good Manner of safeguarding the founders vested interest.
Licenses and Permits
Starting off, one must retain all the licenses and permits needed for the startup to function as a business and prosper. This is essential as it lawfully allows the company to conduct their business in each other
Adhering to labour laws is an integral part of every organisation. Hiring and growing the team is part of any growth plan for a startup. Laws with regards to provident fund, gratuity, weekly holiday, maternity benefits, sexual harassment, payment of bonus etc. The startups registered under the Startup India Initiative can complete a self declaration for nine labour laws from the date of incorporation to be exempted from labour inspection.
Contracts are at the centre of a startup or any company. Basic knowledge of contract management is good to have for any founder as one must know the ins and out of what amounts to a contract as per the Indian Contract Act, 1872.
Starting up with a legal stronghold is a formula for success and growth. Having your legal handled will provide founders a clean slate to truly focus on their idea and bring it to life.