INTRODUCTION
More often than not, small businesses are simply unaware of what Legal Documents are necessary to protect and grow their business. Entrepreneurs are known to gamble with calculated risks as a recipe to success. Startups are a playground for entrepreneurs to showcase their bubbling skills and risk-taking abilities to the world. But one should ensure that they don’t end up in legal trouble by missing out on any of the important legal documents that are required by every new startup.
PROTECTING YOUR INTERESTS WITH LEGAL DOCUMENTATION
Protect your interests, avoid costly legal pitfalls, and maximize the likelihood of success for your business with these five legal documents (that every African Startup/Business should have):
Memorandum and Articles of Association
This document is the most overlooked even by lawyers. A well drafted Memart is the best legal foundation for your business. It usually contains clauses regarding;
Legal Name/Business Address
Business Objectives
Business Regulations
Shareholding Formula
Voting Rights
Operating Agreement/ Shareholders Agreement
This agreement usually states the terms and agreement upon which the company would be run. This could be dispensed with if the Memorandum and Articles of Association are properly drafted.
It usually sets out the following terms;
Leadership Selection
Dispute Resolution
Shareholders Rights and Duties
Voting Thresholds
Distribution of Profits and Losses
Buy/Sell Clause
Intellectual Property Assignment Agreement
This is a must have document for freelancers, creators and MSMEs alike. It assigns all the intellectual property created before/after incorporation.
Independent Contractors Agreement
It is important to always put your business relationships with vendors and other contractors who work for you in writing. This agreement will set out their roles and responsibilities.
Employee Contracts
If you have employees then you should invest in an employment contract. This will state clearly their;
Salary
Job Roles/Responsibilities
Share Options
Notice Period
Bonuses
Non-Disclosure Agreements
Non-Compete Agreement
Starting a new business is a lot of work, and it can seem like there aren’t enough hours in the day to get it all done. But by paying attention to your legal startup documents as you create your business, you can protect your investment and prevent a lot of troubles down the road.
While these legal documents are no sure shot recipe to success in your ventures, they are, nevertheless, a testament to your dedication to taking your startup to new heights with proper preparation. So put some effort into getting the legal formalities out of the way for a brighter future as a company.