Legal documents every start up in India should know

To start a business every business owner must be aware of certain rules and regulations that comes with it. There are tips of marketing, how to manage your business and how to make your employees more productive etc. But there are also many legal rules and regulations that comes with it as starting a business is not a small matter.

Here are some of the legal documents every startup in India should know:

1. Confidentiality agreement

It is shared document between two parties that will be dealing with the business. The documents state about keeping the work completely confidential. A classified information that can be only between these two groups. Both the companies are to sign this document to keep everything connected with their business within themselves.

2. Shareholder”™s agreement

This document is an agreement of the rules and obligations for the shareholders. It includes the rules on how the company should be operated and how much each shareholder owns in the business. It also protects the shareholders providing them security, privileges and also the relationship between the shareholders.

3. Licensing agreement

This agreement document is between the two parties, one that has the assets and the other party who wants to use the assets. For example between the owner and the client  who could be another business owner. It grants permission to the client to use the asset of the owner”™s business. The best example can be licensing for franchise.

4. Share purchase agreement

Share purchase agreement comes in when you decide to get an investor and make partnership. This declares how much shares are being exchanged, how much each partner is owning and how much share of profit each one will be receiving from the business. It is required so the agreement on how much sale, warranties and representations both the partners will be making to the investor and the buyer is kept in record hence the consumption of the profit can be shared based on it.

5. Non competition agreement

In this agreement it mentions that both the partners will not partake in any form of operation, act, business, or engage in any activity that will lead to direct competition with the other partner.

This document makes sure that any act of one of the partners should not make the other partner feel threatened or harm their partnership while they exist together for a business by creating a competition within the business.

6. Employee letters

This includes offer letters and contract letters. These agreements are between the company and the employee it consist of:

• The amount of salary an employee will be provided based on the designation
• The contract period, in case of contract deal
• Hours of daily work
• The rules and regulations of the company
• Required commitments, etc

7. Laws

This legal document consists of the rules and regulations of the company. No organization, association or any business can run without laws. Make sure these laws are beneficial for your business and are professional. The company founders should have firm laws but it should also not sound like your employees are captivated.

The laws should keep your business systematized, help in running it placidly and protect it. 

Sumathi

I’m a tax expert with over 10 years of professional experience. I’ve gained practical insights on GST and other Taxes during my tenture as a Tax expert and GST Trainer in Reach Accountant.