What Legal Documents Do Startups Need in India?
Legal Documents For Startups in India
Legal Documents incorporation and operations are essential to protect your interests as well. Be it starting your company, hiring your first employee(s), or communicating with potential investors over your business; having the correct legal documents prepared is key. Startups India has provided the following list of legal documents which will be useful starting from day one:
1. Founders’ Agreement
For a startup with two or more founders, this is the most valuable document.
Importance of this document
Describes the relationship between the founders; who owns what, who has which roles, who does what, and what happens in the case of one of you leaving the startup/partnership.
What it should have:
Distribution of equity
What part of the company/founders get which roles
The process of making company/founder decisions
Leaving the partnership
How to solve disputes
Change in ownership to one party
2. Non-Disclosure Agreement (NDA)
As a startup, you have to protect the information that you keep confidential from your competitors and is essential to the business; your intellectual property.
Importance: For a party to be legally bound to confidentiality.
What should it include:
What is confidential
How long will it be confidential
Who will be able to speak/disclose to people during this timeline
What happens if you break this agreement
3. Employment Contracts
Legal employment is formed as soon as you start making hires. Employees must have legal documents which outline the conditions of employment.
Legal Documents Required for Startups Incorporation in India
Legal Documents Required for Startups in India
Legal Documents Required for Startups in India
Legal Documents Required for Startups in India
**Documents that are needed for legal compliance:**
**1. Job title and job-related duties**
**2. Salary and Benefit Packages**
**3. Notice period and termination**
**4. IP rights and confidentiality clauses**
**5. Non-compete clauses (if needed)**
**4. Offer Letters**
This is also the first obligation that will come before the full employment contract.
**1. Role and Job Title**
**2. Start date**
**3. Salary breakdown**
**4. Basic terms and conditions**
**5. IP Assignment Agreement**
Almost everything that adds value to your startup—code, content, design—depends on your team. That value should be protected.
*To transfer IP ownership from employees or freelancers to the company, you will need it for the following:*
**Scope of assigned work**
**IP rights transfer**
**Moral rights waiver**
**Party Signatures**
**6. Incorporation Documents**
These essential legal documents provide your startup with both legal identity and structure.
*What it includes (for Private Ltd Companies):*
**Certificate of Incorporation**
**MOA and AOA**
**PAN and TAN**
**DIN and DSC**
**7. Shareholders’ Agreement (SHA)**
This agreement controls your relationship with the investors and other shareholders.
**To be able to define rights, responsibilities, and equity-related terms, you will need it for the following:**
**What it should include:**
**1. Shareholding pattern**
**2. Voting rights**
**3. Exit clauses**
**4. Tag along/drag along rights**
**5. Anti dilution protection**
**8. Term Sheet**
This is a non-binding agreement that will create the conditions before formal investment documentation.
Valuation, investment amount, equity offered, exit terms
Privacy Policy
Collecting user data through a website, app, etc. makes certain legal documents a necessity as per Indian Law.
What it should include:
What data is collected, for what purpose, and how it will be stored
Data security practices
User rights and consent
Terms and Conditions (T&C)
What it should include:
User Responsibilities
Payment / Refund terms
Limitation of Liability
Governing Law
Vendor Agreements
If you will be paying for any services (tech, marketing, office) it should be in writing.
What it should include:
Scope of services
Payment structure
Termination clauses
Indemnity provisions
Investment Agreements
Once funding is confirmed, this binding document seals the deal.
What it should include:
Investment Amount
Equity Issued
Representations and Warranties
Exit Terms
Board Resolutions
These are official records concerning important and large-scale decisions regarding the company.
What should be included: Title and content of the resolution
Date of approval
Names and signatures of the members of the board
14. GST Registration and Compliance
If applicable, this is a legal obligation for tax purposes.
What should be included:
GSTIN Certificate
Filing of periodic GST returns
GST-invoicing
15. Trademark Registration
Although optional, if your brand is registered, it can save you from expensive disputes in the future.
What it is needed for:
To protect your logo, name, or tagline from being copied.
What should be included:
TM application
Class selection
Power of Attorney if an agent is used
Concluding Remarks
The legal documents needed to set up a startup in India is comparable to building a house without a foundation. These documents fortify you and enhance credibility in the eyes of your investors, employees and customers.
Each of these legal documents, which range from incorporation documents, shareholder agreements to IP assignments, serves an important purpose in protecting your business as it expands. It is best to start this early, use credible templates, and consult a legal expert when required. It is always more expensive to fix legal issues later than to do it right the first time.
The first step in building a startup is protecting it with legal documents. For more information, visit Digital Assistance.
