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You have taken the<\/span>\u00a0monumental<\/span> step of <\/span>your<\/span> startup journey by incorporating your company. While the thrill of starting a new business is intoxicating, it could overshadow the minutiae of operating it. Neglecting the legal documents for your new company can result in compliance issues or legal disputes, which get in the way of perfecting your idea and scaling up operations. <\/span><\/p>\n Here is an <\/span>overview of the common documents<\/span> that are vital to<\/span> <\/span>a startup:<\/span><\/p>\n Table of Contents:<\/p>\n After incorporating a limited company<\/span> for the purposes of a startup<\/span>, <\/span>there are a number of documents <\/span>that can provide<\/span> legal protection<\/span> to the stakeholders involved<\/span>.<\/span><\/p>\n Companies have their own Constitution. In some cases, <\/span>these can also be known as Articles of Association<\/strong><\/a><\/span>,<\/span> functioning as a contract that binds the company and its members.<\/span> <\/span><\/p>\n The Articles <\/span>list out<\/span> fundamental information of the company, such as<\/span>:<\/span><\/p>\n It is imperative that the Articles are unambiguous and detailed, s<\/span>o<\/span> as to avoid confus<\/span>ion in the startup\u2019s operation down the line.<\/span> <\/span><\/p>\n To save time, different jurisdictions often have a standard template startups can consider <\/span>adopting (in Hong Kong, the<\/span> Model Articles<\/a> are <\/span>published by the Companies Registry), <\/span>editing its contents as they see fit <\/span>instead of starting from scratch<\/span>.<\/span><\/p>\n A <\/span>Shareholder Agreement<\/span><\/a><\/strong> is a contract between a company\u2019s shareholders, and<\/span> is useful in <\/span> consolidat<\/span>ing<\/span> the equity proportions for found<\/span>ing shareholders<\/span> and <\/span>angel investors<\/span>, as well as listing out the<\/span>ir<\/span> <\/span>rights and <\/span>o<\/span>bligations, <\/span>such as when and how they can issue new shares or transfer ownership of their own shares.<\/span><\/p>\n Proprietary assets are the most valuable property of startups<\/span>. <\/span>W<\/span>hen the ownership rights to these assets are transferred, <\/span>they are<\/span> <\/span>also the <\/span>most prone to <\/span>ambiguities and confusion. This can be prevented by delineating each party\u2019s rights in easy-to-<\/span>read<\/span> documents. <\/span>An <\/span>Assignment of Intellectual Property Rights<\/span><\/a><\/strong>, <\/span>as its name suggests<\/span>, <\/span>allows founders<\/span> <\/span>who hold intellectual property rights (patents, registered trademarks, designs etc.) to <\/span>vest <\/span>them <\/span>in the startup<\/span>.<\/span> In the event that the founder leaves the startup, the company can continue to make use of the intellectual property.<\/span> <\/span><\/p>\n Startups can also license out their software and trademarks to outside parties without compromising their ownership of the assets by way of <\/span>Software License Agreements<\/span><\/a><\/strong> and <\/span>Trademark License Agreements<\/span><\/a><\/strong>.<\/span><\/p>\n All<\/span> initial investors and founders should<\/span> also consider<\/span> sign<\/span>ing<\/span> a <\/span>Confidentiality Agreement<\/span><\/a><\/strong> t<\/span>o prevent parties to the startup from divulging confidential information crucial to the company\u2019s development<\/span>.<\/span><\/p>\n MAKE-IT-EASY DOCUMENTS: Start Up Legal Documents\u00a0<\/a><\/p>\n To facilitate the day-to-day operations of the business, the startup\u2019s shareholders may appoint a d<\/span>irector<\/span> via a <\/span>Shareholders\u2019 Resolution to Appoint Directors<\/a><\/strong>.<\/span> The <\/span>director is a statutory officer of the startup, instead of an employee, but they can be recognised as such via a <\/span>Directors\u2019 Service Agreement<\/span><\/a><\/strong>, under which they can <\/span>enjoy <\/span>employment <\/span>benefits <\/span>guaranteed by<\/span> the Employment Ordinance.<\/span> Startups that wish to engage a mentor or advisor instead can make use of a <\/span>FAST (Founder Advisor Standard Template) Agreement<\/strong><\/span><\/a>, where a person assumes an advisory role in the startup not for monetary compensation, but for the right to receive <\/span>company shares <\/span>in the future.<\/span><\/p>\n As for other employees, s<\/span>tartups can save time during the hiring process<\/span> <\/span>b<\/span>y <\/span>making use of <\/span>Zegal\u2019s<\/span> <\/span>Employment Contract<\/span><\/strong> <\/span><\/a>template<\/span>, which ensures that employers do not miss out on any crucial provisions such as statutory benefits<\/span>,<\/span> restrictions on financial interests in other companies<\/span>, or non-disclosure clauses<\/span>.<\/span> <\/span>To incentivise employees, startups <\/span>can consider offering <\/span>them shares with the <\/span>Share Option Plan<\/span><\/a><\/strong>, where employees are granted the option to purchase shares<\/span>, subject to the <\/span>Directors\u2019 Resolution<\/span><\/a><\/strong> and <\/span>Shareholders\u2019 Resolution<\/span> to Adopt Share Option Plan<\/span><\/a><\/strong>. T<\/span>he <\/span>Share Vesting Agreement<\/span><\/a><\/strong> can also be adopted to<\/span> <\/span>directly vest employees<\/span> with shares<\/span>, with <\/span>the startup reserv<\/span>ing<\/span> the right to buy them back.<\/span><\/p>\n Workplace policies, such as the <\/span>Health and Safety Policy<\/span><\/a><\/strong> or the <\/span>Data Protection Policy<\/span><\/a><\/strong> which lists out guidelines on safeguarding workers\u2019 personal data, are conducive to establishing a safe and congenial working environment, which enhances the reputation of the startup and attracts talent. Laying down clear ground rules with a <\/span>Disciplinary Policy and Procedure<\/span><\/a><\/strong> document is the first step in establishing common ground and trust between the employer and employee<\/span>, and lowers the possibility of future labour disputes<\/span>.<\/span><\/p>\n When conducting business dealings with outsiders, Zegal\u2019s contract templates can ensure that <\/span>startups<\/span> lock down all the essential terms of the transaction. The <\/span>\n
\nPost-Incorporation Agreements<\/span><\/h4>\n
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<\/p>\nDaily Operations<\/span><\/h4>\n