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Legal Documents Every Startup Needs

Legal Documents Every Startup Needs

Following its incorporation, every startup company needs a variety of essential legal documents in order to launch its vision and conduct its business.


Founders’ Agreement

This is a comprehensive agreement defining the legal relationship, responsibilities, and operating procedures that govern each aspect of the startup company. This includes the relationship between the founders themselves and between the founders and the company. A founders’ agreement helps to streamline potential conflicts that may develop, provides for conflict-resolution steps, and defines the work and performance expectations of each founder. In addition, this agreement should include non-compete clauses and dissolution or sale-of-company effects.


 Non-Disclosure Agreement (NDA)  

An NDA protects any type of confidential and proprietary information or trade secrets exchanged between the startup and parties involved with the company, such as service providers and potential investors. This is crucial to maintaining the secrecy involving sensitive and valuable company financials, development processes, or other aspects of a company’s operation that would be compromised if confidential proprietary information were made public.


Terms and Conditions (T&C)

The primary purpose of the T&C is to protect your business by giving customers a precise description of what they can and cannot expect to receive and depend on from services or products provided by your company. This document reduces potential company liability by establishing clear parameters concerning shipment, provision of service, and payment terms. Moreover, it ensures your online website or application does not violate any regulations or laws applicable to your industry.


Employee Stock Option Plan (ESOP)

To ensure expansion of your startup, you must recruit quality professionals. Startup companies can attract such professionals by offering them benefits in addition to the salaries provided in their respective employment agreements. By allowing key staff the option to purchase company shares in the future, you will not only facilitate the startup’s success, but you will retain valuable key staff as well. The mechanism of such equity-based plans is governed by ESOP agreements.


Business Plan

While not legally necessary, a business plan is typically required if you decide to seek financing or to sell your business. It also helps provide clarity for business operations.


Source: barlaw.co.il