At first we we're going to teach you how to fold origami, but then we thought maybe helping you to understand and sail the surrounding legal issues when operating a startup would be more useful. We will be exploring on areas such as structure in a company, co-founder arrangement, key issues during fundraising, how to contract like a businessman and finding the right legal advisor. For further information, visit our website at ma2017.mymagic.my. Facebook - Facebook.com/magic.cyberjaya Twitter - Twitter.com/MagicCyberjaya Instagram - Instagram.com/magic_cyberjaya/ LinkedIn - my.linkedin.com/in/magiccyberjaya YouTube - https://www.youtube.com/channel/UCIT_ihmWh5f3MCobvEwWMaA

1. LAWYER-UP!
B Y : F A R E E Z S H A H
ADVOCATE & SOLICITOR | COMPANY SECRETARY | TRADEMARK AGENT
M A S T E R C L A S S :

2. WHAT WILL BE COVERED?
COMPANY
Company Structure
Co-Founder Arrangement
Fundraising Issues Common Agreements
Finding a Lawyer

3. MISTAKE #1

4. NOT SETTING-UP AS A COMPANY

5. Limited Liability Partnership
Partnership
Sole-proprietorship
Difficult to
Scale Up
Can't
Convert

6. COMPANY
COMPANY STRUCTURE

7. CONCEPT OF COMPANY
Company Director(s)
Shareholders
Employee(s)
Key Features:
Separate Legal Entity
Limited Liability
Equity Model
Is it the best for start-up?

8. COMPANY STRUCTURE
Director(s)
Shareholders
Constitution
Companies Act 2016
Employee(s)
Key Point:
Power of Shareholder
Power of Board
Maintaining Control
Structure for Start-Up?

9. CO-FOUNDER ARRANGEMENT

10. CO-FOUNDER ARRANGEMENT
Democracy
Example of Equity Split:
Dictatorship Hybrid
Key Point to Agree:
Equity Split & Vesting
Salary Entitlement
Duties & Responsibilities
Reserve Matters (for Minority Protection)
Exit (Share Buy Back)
Time Commitment

11. EXAMPLE OF VESTING
E.g.1: 25% up front and the rest monthly
or annually over 3-4 years.
E.g.2: 50% after one year and the balance
50% upon exit.

12. EXAMPLE OF EXIT
All unvested shares to be forfeited. All
vested shares will be repurchased at value
mutually agreed or in absence of
agreement Net Asset Value (NAV)
Bad Leaver - all shares will be forfeited.
Good Leaver - only unvested shares
forfeited

13. BAD IDEAS
50%
50/50 Split Draw Big Fat Salary
No Exit Plan No Agreement

14. IS AN AGREEMENT NECESSARY?
But it is so expensive?
YES
Key Notes:
Don't aim for one size fits all model
Cover key issue only
Don't be stingy to spend
Revisit agreement from time to time

15. FUNDRAISING ISSUES

16. COMMON OPTIONS
Debt
Bank
P2P
VC Angel "G"man
FFF
ECF
Equity
Grant

17. COMMON ISSUES & SOLUTIONS
Signing w/o Shopping or Negotiating
Valuation Limbo
Sunk Cost Fallacy
Term Sheet / Letter of Intention
Over / Under Value
Poor Record Keeping
Book keeping
Data Collection & Analysis
Cost Benefit Analysis
Financial Modeling

18. KEY POINTS DURING NEGOTIATION
How much fund required? - to much or too little
Equity / Interest %
Controlling Rights

19. MISTAKE #2

20. FUNDRAISE AFTER RUNNING OUT OF MONEY

21. MISTAKE #3

22. FAIL TO SEEK HELP OR ADVISE

23. COMMON AGREEMENTS

24. BASIC OF CONTRACT
Written Oral Implied
IMPORTANT NOTE
Ability to enforce
Ability to prove

25. MISTAKE #4

26. LACK OF EVIDENCE

27. COMMON AGREEMENT
Non-Disclosure Employment Supply / Service
USE WITH CAUTION
Most transaction is unique
Focus on structure of transaction
Minimise risk

28. FINDING A LAWYER

29. Chemistry One Stop Solution
Fee Structure Value in Service
Language
Personality
Responsiveness
Diverse Practice Area
Understand the business
Hourly
Fix
Maximum Cap
Solve Problem
Cost Effective Solution

30. THANK
YOU!
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