Startup Survival: Legal Lessons by Adrian Corbett

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Startup Survival: Legal Lessons by Adrian Corbett

Presentation made at The Entrepreneur Network

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Startup Survival: Legal Lessons by Adrian Corbett

  1. 1. Start-Up Survival: Legal Lessons Episode 1- The Fundamentals Adrian Corbett Solicitor
  2. 2. How to deal with legal issues • Minimal budget for legal advice? • Be aware of key legal issues • Tension between rapid progress and safe steps
  3. 3. 1. Early Stage: Starting Up, Incorporation etc • First steps: Confidentiality/Non Disclosure Agreements • Company structure, with reference to growth and further investment down the line, potential tax implications • Fundamental documents for private companies: – articles of association – shareholders agreement
  4. 4. Overview of Early Stage: Starting Up, Incorporation etc • Ensuring the smooth running of the business if founding members leave or perform poorly: – pre-emption rights – good leaver/bad leaver provisions – options/vesting of shares based on time spent or results achieved – non-compete clauses • What is your planned exit from the business? Do the co- founders agree? – drag along/tag along
  5. 5. 2. Protection of Intellectual Property: Potential pitfalls of not protecting your IP • What protection is available? – patents: will you meet the strict requirements? Where should you register: EU and/or USA? • Other options: – trade marks – design rights – database rights – copyright
  6. 6. Protection of Intellectual Property: • Safely commercialising your rights: licensing • Avoidance of infringement of other’s rights: who is the rights- holder? – Text, image, music, video: have you obtained the necessary licences? – Passing off
  7. 7. 3. Up and Running, Avoid the Pitfalls: • Directors’ duties: – to act in accordance with company’s constitution, – to promote success of Company for benefit of shareholders etc – broader considerations: community and environment shadow directors? – Insurance
  8. 8. Up and Running, Avoid the Pitfalls: • The company is struggling to pay creditors: do my duties change? – wrongful trading, personal liability, – Disqualification • Good corporate housekeeping: recording decisions, board procedure, minutes, AGM’s etc • Raising investment, – Are you investor-ready? Ready for due-diligence
  9. 9. 4. Health and Safety for Your Website • Terms and Conditions of use. • Privacy policy, data protection. • Potential liability for website content: – Defamation – User-generated content – Infringement of Copyright – Takedown policy • Applicability of website Terms and Conditions of UK-based start-up in other jurisdictions
  10. 10. • Your standard terms and conditions: – Are they clear? – Are there any unfair provisions in relation to consumers? • Typical pitfalls for early-stage entrepreneurs in relation to contract law: – Nothing in writing – Email communications: has a binding contract been reached? What exactly are the terms? 5. Understanding Contracts, Potential Disputes
  11. 11. Understanding Contracts, Potential Disputes • You are entering into a major contract, what should you look out for? – Do you understand the implications of all the terms? – Dangers: • unclear, onerous or open-ended obligations, • minimum period, exit options • IP rights
  12. 12. Understanding Contracts, Potential Disputes • How do you get out of a contract if it is no longer working for you? – Safe termination: notice provisions? Penalty clauses? – Is one of the parties in breach? Is it a minor breach or a fundamental breach? – Avoid a claim for damages for wrongful termination.
  13. 13. Understanding Contracts, Potential Disputes • Debtors - managing cash flow and debt recovery: – Know your rights: late payment interest on B2B debts – Your invoice is not being paid, what are your options? • statutory demand, insolvency proceedings • Court proceedings
  14. 14. Survival: • What are the hot legal buttons for your start-up? – Keep them on your radar at all times, – Take care now to avoid problems later – Problems become a major distraction • Litigation: if you are successful you may be a target
  15. 15. Adrian Corbett Solicitor Twitter: @AdrianCorbett Linked In: http://uk.linkedin.com/in/adriancorbett

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