Having your own company and being called yourself by the name of the company’s owner is a dream that you just want to fulfill.
The day an “Idea with Hope” takes the shape of a “Company” a new journey for success begins. But the idea and the company require legal protection along this journey, from the first day onwards. To not fall into unnecessary and unrequired hurdles, these measures are inevitable for you as a business owner.
4 building blocks are necessary for –
MOA – “ Foundation of your Company”
The term MOA stands for “Memorandum of Association.“. It is a legal document that serves as the foundation for a company. It explains why this organization was founded and outlines its ideals and goals. It is a document including all of a company’s laws and regulations governing its relationships with the outside world. The Companies Act of 2013 addresses Memorandums of Agreement. After the incorporation of the company, it ensures the company will not work outside the scope of the MOA. If the company exceeds its power, the activity is called supra vires and thus invalid.
AOA – “Your Company Rulebook”
The “Articles of Association” (AOA) are your company’s constitution. It establishes how your company will be governed. The internal affairs of your company are governed and managed by establishing the by-laws, rules, and regulations outlined in the AOA. The contents of the AOA should be consistent with the MOA and the Companies Act of 2013. It ensures smooth operations and establishes the rights and responsibilities of members.
The AoA addresses issues such as share capital structure, director appointment and powers, meeting and voting procedures, dividend payment policies, and alteration procedures. It ensures smooth functioning and establishes members’ rights and duties.
NDA – “Confidentiality Pact for Sensitive Information”
A “Non-Disclosure Agreement” (NDA) safeguards sensitive information shared between parties. This legally binding contract creates a confidential relationship. One party entrusts confidential information (trade secrets, inventions, sales, marketing techniques, etc.) to the other, who agrees to restrict its use and disclosure. The NDA outlines the scope of confidential information, duration of protection, and permitted uses. The breach of an NDA can result in legal repercussions, ensuring information security.
Last but not least,
Co-Founders Agreement – “A shield for your Company”
Before diving into your exciting startup journey, secure your partnership with a “Co-Founder Agreement”. This legal pact between founders clarifies roles, responsibilities, and ownership (equity split). It outlines how decisions are made (voting rights) and how to handle situations like the founder’s departure or death. It is your roadmap for preventing future disagreements and disputes and ensuring everyone’s on the same page. This fosters trust and protects your company’s success.
Conclusion
For every company, its documents are its key assets. It is the actual building block on which it is standing. Every document plays an important role in the proper functioning and growth of the company. A legally protected company will reduce its chances of falling into unrequired pitfalls, which can hamper the growth of the company. So for early-stage companies, these documents must be kept handy.
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