When starting a new business, the decisions that need to be made can seem complex and daunting.
Start-ups normally operate with finite financial resources which, understandably, are focused on the primary needs of the business. Spending on non-core requirements must be limited to the essentials. LK Shields have compiled a list of four key areas on the legal/compliance side that are worthy of specialist input and support at an early stage. They have aimed to strike a balance between limiting legal spend and recognising the value of putting in place effective structures from the outset to facilitate growth and protect the business.
1. Advice on structure – keep it simple
The most common type of company in Ireland is the private company limited by shares. Such companies limit the liability of shareholders to the amount they invest in the company for shares (often as little as €1.00 at the outset). The limited liability nature of such a company makes it much more attractive to potential investors. The costs are low for incorporating this type of company, particularly when weighed against the potential benefits.
2. Framework for decision-making – manage relationships
The basic purpose of a shareholders’ agreement is to specify how the company is to be managed and, as far as possible, to address in advance any issues that might become divisive in the future if not agreed beforehand. This agreement can be crucial in limiting the damaging effects of future conflicts, which can prove catastrophic for any company, by prescribing the means by which they should be resolved as well as setting out the basis on which relations between shareholders should be conducted.
3. Record Keeping and Compliance – be organised
It is really worthwhile establishing an effective system for record maintenance and filing of key documents (with the Companies Registration Office, the Revenue Commissioners, etc.) at the very beginning. Good practices in relation to maintaining records will pay dividends in the event of a potential investment by a third party investor. An investor will want to carry out due diligence on the business and a key area of their focus will be investigating existing shareholdings, ownership of assets and key contracts to which the company is party. Having this information easily to hand and in good order will present a positive impression of the business and how it is run.
The LK Shields company secretarial team can assist with the incorporation of a company, ongoing maintenance of company records and making necessary Companies Registration Office filings.
4. Intellectual property protection – protect yourself
Where the value of a company lies in its intellectual property (IP), it will be particularly important to ensure that the company has clear evidence of its ownership or entitlement to use such IP. Any assignment of IP to the company should be properly documented in writing. Steps should be taken to ensure that any IP created by third party contractors on behalf of the company, or that may have been created by the promoters prior to the incorporation of the company, becomes the property of the company.
Where you are developing a brand, consideration should be given to protecting that brand through the registration of designs, trademarks and the protection of other intellectual property rights.
LK Shields have a wealth of experience in advising start-ups and providing guidance on key legal considerations to those setting up a business. Their team has expertise in corporate and commercial law, intellectual property, employment, and company secretarial and compliance services, enabling them to provide effective guidance to those starting a new business venture.
For more information please see LK Shields Solicitors LLP
