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Starting a new business involves high chances of risks. Often, 2 or more people come together in order to assemble a startup and apportion this risk. This requires not only financial investment from the co-owners, but also to blend their talent and skills for an integrated effort to turn the startup into a successful business.
Co-founders of a startup often out of amiability, ignore to have important legal documents in place. One such document being the co-founders agreement in Ahmedabad, it is important for the co-founders of a startup to lay down the stipulations relating to their joint effort and have important provisions in writing to avoid any future discontent.
A co-founders agreement in Ahmedabad is a legal document which lays down the terms and conditions between co-founders of a startup regarding how the business will be operated between them. The co-founders agreement in Ahmedabad is a written agreement which provides insurance in case there is any dissonance between the co-founders.
A co-founders agreement must be drafted on the quintessence lines of the business and must state all the provisions relating to factors for which the co-founders are liable. The agreement must be phrased with precision and therefore gives rise to the need to consult with a good startup lawyer in AhmedabadIndia.
There are many things involved in a business setup. There are times you incur losses, and sometimes you will make huge profits. The agreement will play a crucial role in indicating the percentage of profit or liabilities each founder will bear. It makes things easy for you to know the way forward from your startups.
There are several reasons for having a Founder’s agreement in Ahmedabad. Some of them are as follows:
Outlines responsibilities and decision-making process:
You are not assured of what may happen to your lives or business in the future. It is necessary to describe the responsibilities of each of the founders so that you can run your business smoothly at all times. The agreement should state the role of each one of you. For instance, it can specify one member to be in charge of operations while the other is in charge of major decision making.
The founders of the company will dictate different amounts of money and time in the business. The agreement should state clearly the ownership strategy of the business and how it can evolve over time. The best agreement should align the business success with the financial success of the company. It is necessary for you to avoid cases where the business will succeed, and you end up in conflicts on how much each one of the members will receive.
It is necessary for you to align your objectives, vision and exit strategy in business. No one will like to think about exiting the startup when it is time to start the business. But, you should be open and put straightforward procedures which should be followed if one of you will like to exit. This is necessary to avoid cases where people with varying opinions will exit the company when you need them or their exit will lead to unbearable losses in your business.
There are times when founders will like to leave the business and concentrate on their personal issues. It is necessary for you to avoid cases where the founders will leave your business and expose your business to the risk of dissolution. You can end up wasting a lot of time trying to negotiate on what should belong to who after one of the founders decide to quit, but a good founders agreement will make it easy for you to take action on the best way for you to quit the business.
Ahmedabad is an good location to start a new business considering the new opportunities that are arising in the city. the city is a cultural hub and is a brilliant place to start a new venture. the education sector is soaring in the city and also the city is a mixture of tradition and new modern approaches. there have been great progresses of the city under the leadership of the PM of India.
Why do I need a Founder’s agreement in Ahmedabad?
The sole purpose of this type of agreement is to make a clearance between the co-founders related to the introduction of capital, share in profit, liability, etc. The key issues covers, roles and responsibility of co-founders, equity ownership etc.
As a Founder’s Agreement is one of the important legal documents, it might be beneficial to take legal help in this regard.
provides the professional help needed for drafting a Founder’s agreement in AhmedabadIndia
The following legal documents are required for the Founder’s agreement in Ahmedabad:
1) Articles of Incorporation.
2) Intellectual Property (IP) Assignment Agreement.
3) By Laws
4) Operating Agreement (Founder’s Agreement)
5) Non Disclosure Agreements.
6) Employee Contracts and Offer Letters.
7) Shareholder Agreements.
Some of the advantages of the Founder’s agreement in Ahmedabad are as follows:
1. It can impact how the company is run
How a company is run is usually left to the Board of Directors. Often founders are directors also, but what if you wish to recruit directors who are not shareholders or you want to step away from the daily management at a later stage. It is advisable that the shareholders ensure certain issues should require shareholder approval, such as loan agreements, bringing in investment or selling assets.
2. Shareholders may not agree
Disagreements occur in all businesses and it is sensible to agree to the provisions that should apply to how a business or commercial decision is to be made and who has the authority to agree on this. It is much harder to do this once the disagreement has already occurred. Provisions should include what decisions need a majority or in turn a unanimous agreement and what can be determined by the board of directors only. Laying out the areas of responsibility and how decisions can be reached avoids issues leading to disputes. Those that have only 2 shareholders 50:50 need this clearly mapped. Otherwise, if you cannot agree then it could result in a deadlock and the company being wound up, losing your valuable IP along the way. So decide now who has a casting vote as well as when and how it will be used.
3. It can address how to resolve disputes
Many of the disputes which typically arise between shareholders are avoided or resolved quickly if there are documents in place which deal with the issue. If disputes do occur, there can be specific clauses that may include at what stage there would be a referral to mediation or arbitration, all of which seek to avoid court action. It can set out how shares should be valued if this is a disputed topic and it can allow you to agree to third parties who are permitted by you all to determine a dispute on your behalf
4. It can protect the minority shareholders
A shareholders’ agreement can provide protection for minority shareholders by only allowing certain decisions to be made by the unanimous consent of all the shareholders. For example, the agreement can limit the ability of the company to issue further shares unless all the shareholders agree. This protects the minority shareholder where the majority may only attempt to sell their own shares instead of finding a buyer for all the shareholders. This is something in-coming investors will certainly welcome and will look attractive to them if they are giving you seed or scaling up funding.
5. It can protect majority shareholders
Majority shareholders can benefit from a “Drag along” provision. This would come into play where an offer is received to buy all of the shares in a company and the majority shareholders wish to accept that offer. The rights allow the majority to force the hand of the minority shareholders on the same terms to avoid losing the deal. This is key for those that develop IP, launch and wish to sell on the product once it has been tested in the market.
6. Attractive to Investors
Having a Shareholders’ Agreement increases the attractiveness of the company particularly for investors. It can demonstrate a professional business that has taken legal advice and planned for certain eventualities. Investors are reassured that disputes can be dealt with swiftly and that all parties have transparently laid out their obligations to the company
Starting a new business is an exciting and challenging undertaking. Begin by reviewing existing agreements you may have with your employer, as they may contain IP assignment provisions or restrictive covenants that could limit or harm your new venture. Next, consider how you should protect your business idea: use NDAs, IP contribution agreements, and consider the applicability of patents, copyrights, and trademarks. Next, decide how your company will be structured. When evaluating which form of entity is right for you, identify tax considerations and the location and jurisdiction of your business. Finally, draft governing documents such as your articles of incorporation, bylaws, shareholder agreements and operating and partnership agreements. Consulting with financial, accounting/tax and legal professionals earlier in the process will help you avoid future problems and anticipate key steps as your business grows.
Your projected funding needs will be key. If you don’t need a lot of money you may prefer debt to equity, as it will allow you to expand without diluting your ownership or control. However, early-stage investors may not be willing to lend your business money unless there is the potential for upside; convertible debt can be a solution. The real risk of selling equity at an early stage is that you give away too much of your business for too little. You need to have a realistic sense of the attractiveness of your business to potential investors. Also, securities offerings done right aren’t cheap. Working with advisors, including industry experts, financial, tax/accounting and legal professionals before you begin to raise capital is a smart way to better position your business.
Look for ways to nurture your growth by developing relationships or strategic partnerships with other businesses or individuals who can further your goals. This may include targeting certain businesses for merger or acquisition opportunities. Plan out your expected financing needs by considering whether credit or equity rounds the best suit your objectives. Be prepared to devote more time to managing your workforce. In addition to polishing your employment policies and processes, you’ll need to pay more attention to compensation and benefits, immigration compliance and whether you’ll need additional office space. Proactively seek the advice of your accountants, lawyers and financial advisors as you take your business to this exciting next stage of expansion.
You should start by creating an exit plan that includes your personal goals (i.e., estate planning), as well as goals for the future of your business. This will help you hone your preparation and decision making during the sales process. Purchasers will want to review your financial, business, legal and other records, so it will greatly improve the efficiency of the process to make sure you are organized in advance. You should engage with your professional advisors (tax, financial, legal, etc.) before you start looking for purchasers to ensure your accounting, tax and a legal house is in order. Additionally, if your advisors discover that any cleanup is necessary, you’ll be able to handle it before it can adversely affect your business’s sales prospects.
You should already have an exit plan. As part of that plan your tax, accounting, and legal advisors should be assisting you as needed. For example, your plan may involve engaging brokers or investment bankers to help you find a buyer. Your lawyers should help you revise and negotiate any broker or banker contract. Your business records should be in order, and you should be careful to keep them that way. If you’ve engaged a broker or banker, he/she will help you navigate the actual sales process, but your accountants and lawyers should be engaged to review and revise letters of intent, draft and revise deal documents, and assist with due diligence.