By : Akhil Gopakumar
Legal Documents to be maintained in a Startup
In the previous article we discussed about how to maintain financial records in a startup firm. Hope it was of use to somebody out there. Now in this article lets look which all legal documents should you maintain in a startup firm.
Memorandum of Association (MoA)
Of all the legal documents MoA or Memorandum of Association is the most important document. Therefore you should prepare MoA with utmost care and importance. This document is required to register a firm in most of the commonwealth nations. In India, during the incorporation of a company the MoA should be filed with the Registrar of Companies. It contains the fundamental rules regarding the constitution of the company. It also encases the rules regarding the operation of the company such as what all work the company will be able to undertake and so on.
Articles of Association (AoA)
AoA, along with MoA forms the constitution of company. It defines the responsibilities of directors and shareholders, the mode of operation of the company and the control of share holders over the directors of the company. Like MoA, AoA should be filed with the Registrar of Companies at the time of Incorporation.
Certificate of Incorporation
The Certificate of Incorporation is a document containing the details regarding the formation of the company. It includes the date of formation of the company, Corporate Identification Number (CIN) and the official address of the company. This document is issued by the Registrar of Companies of the respective state governments.
Non-Disclosure Agreement (NDA)
NDA is a legal contract made between two or more parties (generally two) who wish to exchange confidential information with one another but restricts access to third parties. It is also a contract in which both the parties agrees not to disclose the confidential information shared between them. If any of the party violate the terms and conditions of the contract, the other party can initiate legal proceedings as this document is of legal importance.
Shareholders agreement is a contract between the shareholders of the company. This document addresses the protection, rights and responsibilities of shareholders of a company. This document also consists of information regarding the course of action regarding the compensation the shareholders receive if the company gets acquired by any other entity.
Employment agreement is a contract between the employer and employee of the company. This agreement contains information regarding the terms and conditions between the relationship of an employer and employee and the benefits the receive from each other. It also outlines the duties, rights and responsibilities of employee towards the company and the responsibilities of employer towards the employee.
Business Plan (not one of the legal documents)
This is an important document to be kept by a company because if you go out seeking finance from any entity or for selling your business or approaching a potential investor, the business plan is a must. This document also outlines the goals of the company and your plans to attain that goal and the revenue model you are choosing.
So to all startup folks out there. Its better to be late than never. Get all these legal documents ready for a hassle free and smooth operation of your firm.