15042022 New Delhi, COMMERCIAL LAW CHAMBER:
- What are legal compliances for an upcoming StartUp
- How Strong is your entity, legally
- How do you safeguard your innovations
- What is your business model
- Whom to go to for legal consultation
Being a StartUp adds value to any individual on a day-to-day basis. Working 360 degrees, understanding the market dynamics, creating an impact on the society and walking towards a firm position in the UNICORN club are few of the most interesting aspects of the journey.
To travel across on these lines our intuition, innovation and influence are strong pillars. However compliances need knowledge on latest issues and orders given by the governing bodies. Following the guidelines is favorable on the long run, but missing out on any of these could create a chaos.
Being legally strong from the beginning is better or taking up legal issues as they come is good….I am leaving it to your intelligence. However to be right always, would lead us to experts and one such profound professional is today’s delight.
Shri Prasenjit is enrolled with the Delhi Bar Council and has over 12 years PQE in public policy and regulatory advocacy. He has been assisting and later, actively worked with Competition Commission of India, Ministry of Corporate Affairs over matters pertaining to bid-rigging, public procurement, cartel investigation, merger control, and many more.
Shri Prasenjit is extensively exposed to disputes relating to Telecom, Retail, Agro-Chemical, Special Chemical, Healthcare Sector and other sectors. He also handles arbitration matters and complex litigation as well as advice entities on corporate issues. He also assists State Government bodies on various commercial issues.
“COMMERCIAL LAW CHAMBER (‘CLC’) is a litigation firm headquartered in New Delhi, specializing in Tax, Regulatory, Commercial & IPR Disputes and advisory. With an in-depth understanding of regulated sectors such as Pharmaceuticals & Healthcare, Broadcasting & Telecom, Agri-Science and Aviation, CLC has advised and represented Indian and foreign stakeholders across these industries.”
In a candid chat Shri Prasenjit, Partner CLC, revealed about the ways, StartUps need to be secured legally…
What are the common legal issues faced by a StartUp?
Every startup is unique in its business. The laying down in clear and cogent terms the working business relationship amongst the Parties shall ensure smooth and efficient functions of the business. The working business relationship shall relate to roles and responsibilities of each Party, and business strategy. Several rounds of pre-incorporation negotiation discussion are very important to ensure bare minimum legal issues. Moreover, the taxation or legal advice cannot be applied uniformly to all without understanding the business model.
What are the disclaimers or precautions to be followed for Startups?
Counseling is done via discussion rounds, creating awareness and due diligence before or after entering into any major transaction. A few precautions to consider in Startups are (a) To clearly chalk out Founder Agreement Shareholding Structure; (b) To spell out the quorum required for each meeting of the Board and where required, some major decisions would need the presence and approval of all directors on the Board; (c) To ensure approval of Shareholders meeting to carry out certain statutory businesses as per Companies Act, 2013; and (d) To ensure timely regulatory compliance with State Authorities and Central Authorities to prevent imposition of penalty.
How do you counsel Startups on legal issues?
Founding Agreement is essential for Startups in India. The customary entity for a startup in India is either a Private Limited Company or Limited Liability Company. Startup entities need to carefully assess its taxes which are as follows:
- Income Tax on share premium received from investors
- Income Tax on issuance of ESOPS
- GST and Withholding tax on issuance of advisory shares to consultants in lieu of their services.
- Income tax benefits to be availed under startup India scheme.
Startups should protect their businesses with a good insurance product as business uncertainty is the call of the times due to pandemic and economic turmoil.
Can we consult irrespective of Geo location?
In today’s era, consultancy is done globally without any geo location hindrance.
What is your advice to upcoming Startups?
Working with a diversified team is important to sail through initial tough times. Further startup entities need not miss out on important clauses such as non-compete clause, IPR clause, ROFR clause, anti-dilution clause, lockin period clause, and many other key clauses to ensure smooth and non-litagative functioning of startup enterprises. Startups entities are foundation of Make In India dream of our Hon’ble Prime Minister, and each start up shall ensure a very sound and strong Founders Agreement. Reputational risks and product liability need to carefully look into, by stakeholders.
Shri Prasenjit is available for legal guidance on M: +91 9650957397 | T: +91 11 24370110, E: prasenjit@clclaw.in
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