Navigating the startup world is a journey filled with challenges and opportunities. One of the most critical elements for success is the ability to manage and understand the legal aspects of operating a startup company. It is essential for entrepreneurs to be familiar with several key contracts during the incorporation process:

Founders’ Agreement

This is one of the first and most crucial contracts a startup needs to have. It defines the legal structure, shareholdings of the company,  and outlines the roles and responsibilities of the founders, protecting their interests.

Company’s Articles of Association (or other incorporation documents)

The Articles of Association serve as the basic contractual foundation of the company. They stipulate the rights, duties, and governance structure of the company and its shareholders. Following an investment round, this document becomes the backbone of the contractual relationship between the company, founders, and investors.

Investment Agreements

Investment Agreements are essential for setting the terms of the relationship between the company, founders, and investors. They terms such as dilution, preferential rights, and partnership agreements.

Intellectual Property Assignment Agreements

These agreements ensure that ideas, inventions, and innovations developed by founders, employees, and contractors are duly assigned and transferred to the company. It’s crucial to protect the company’s intellectual property and ensure it remains under its ownership at all times.

Repurchase/Restriction Agreement

Also known as a Founders’ Restricted Rights Agreement, this contract details the relationship between each founder and the startup concerning equity shares issued, vesting schedules, and what happens to those shares if a founder leaves voluntarily or is terminated, or in the event of their disability or death.

Customer and Supplier Agreements

Setting the terms for trade between the startup and its customers and suppliers is key to business success. Well-defined agreements minimize risks and streamline operations.

Understanding and implementing these contracts from the outset can make the difference between a successful startup and one that encounters legal difficulties. It is advisable to seek professional legal advice in the early stages of establishing the startup to ensure that the company’s legal foundation is solid and unassailable.