Incorporation and Licensing: India is definitely a land of opportunities and with more business friendly schemes it is imperative that businesses are aware of what regulatory regime India offers and the licenses and compliances that business need to be mindful of while navigating their operations in India. Depending on whether your business in in advisory, services or manufacturing a careful and intensive advisory is required for successful operations with no legal impediments. Equally important is the advisory agencies that play a key role in your entrepreneurial journey. Be it any nature of business a good and comprehensive start up advisory is essential to take care of essentially three components (i) Incorporation & Licensing, (ii) Vendor contracts & Documentation (iii) Investment & Transactional Support. We will talk about each of them in this article.
Starting point of any business is incorporation and licensing. This involves basic incorporation of the entity depending on whether you choose your entity to be LLP or private limited, GST registrations, MSME registrations, Start up India and other business related registrations which entirely depends on what business your company proposes to undertake. Legal Metrology registration, Licenses from RBI on case you a regulated entity are a few of them. This is why a clear understanding of your business model by the start up consulting firms is essential so that no mandatory registrations are left which may have any adverse effect on your businesses. Once your initial registrations and licensing is taken care of another important aspect is choice of your partners, employees, consultants and vendors and the contracts and documents that are entered into with them. If confidentiality and non compete is your concern then your initial documents should definitely talk about the same. Your contracts and documents should clearly specify obligations of each parties, termination clauses, consequences of breach. Employment and HR documents should clearly spell out notice period requirements, confidentiality obligations, abandonment and absconding scenarios to take care of unwanted interpretation and unwelcome exchange of correspondence. Depending on the employee strength more detailed policies may be required to stipulate all scenarios clearly. An important journey in the life cycle of any start up is seeking funding and financial help and documentation for the same. This may start with a term sheet followed by a due diligence by the investor and culminating to a shareholders transaction and the closing. It is advisable and extremely important that all rights, obligations and expectations of the investor and the investee company are clearly spelt out in such shareholders agreement. Appointing a legal advisor and a firm providing start up advisory services is recommended during the due diligence process and the funding to take care and answer any red flags identified by the diligence team and successfully close the shareholding. Investment and transaction support by a consulting firm has a long term impact on the operational compatibility and relationship between the company and its shareholders. This should not be undermined. Many a times it has been seen that companies in a rush to obtain funding succumb to the wishes of the investor which later becomes a sour point. This is definitely avoidable and in the interest of long term relationship and operational independence to the companies a well balanced and clear documentation is essential.
We at Upscale Legal with our strong team of proficient lawyers and company secretaries play a vital role in all stages of start up and companies conducting its business.
