DOCUMENTS FOR BUSINESS START UPS
COMPANY SET UP: The simplest way to set up a private limited company in the UK is online via www.companieshouse.gov.uk (www.gov.uk/limited-company-formation/register-your-company?step-by-step-nav=37e4c035-b25c-4289-b85c-c6d36d11a763) There is also a useful step by step guide to set up at: https://www.gov.uk/limited-company-formation
TRADE MARK SEARCH: Before committing to a name for your company, it is as well to do a trade mark search to make sure that no other business is using the same name for its goods or services. If they do, it could lead to them making a claim against the new business for trade mark infringement or ‘passing off’. I can help you with this and check a number of names across a range of similar services/goods, or you can do a ‘quick search’ by searching for a “keyword” on the Intellectual Property Office website here: https://trademarks.ipo.gov.uk/ipo-tmtext. Obviously a domain name availability search should also be undertaken.
SHAREHOLDERS AGREEMENT: When you have register a limited company in the UK, you will adopt ‘Model Articles’ as part of the set-up which govern how the company is organised and run by directors on a basic level. The way that shareholders agree to instruct the directors, their business aims and exit plans need to be documented in a separate agreement document. Again, this is often missed but is crucial to have this type of clear arrangement to avoid issues in future and also if investors are sought.
DIRECTORS SERVICE AGREEMENTS: Directors and management should always have contracts which set out the company’s’ expectations about their contribution to management as well as their salary and benefits.
EMPLOYEE CONTRACTS: When you take on staff they must be given terms setting out their role and remuneration
NON-DISCLOSURE AGREEMENT (“NDA”) This is a document for you to send to and have signed by any partners you are discussing the project with prior to launch. The reason for having this type of document is that at the outset you will be sharing business plans and information, structure and fees with a business you are not yet in a contractual arrangement with. The NDA provides that the other party will not reveal or share any of the information you discuss about your project with a third party. It therefore prevents them from approaching another entity with your business idea, or worse, a competitor of yours with your data. It is an essential document, often forgotten at the outset.
SERVICES AGREEMENT: it is likely that the company you choose to provide services to you will provide you with terms of service for the work they undertake. It is important that you have a clear roadmap for the services they will provide in terms of the ‘specification’ or ‘statement of work’ that describes their work and your requirements. Fixed prices for delivery against set milestones are usual, but the ‘agile’ method of working can also be considered if the project is likely to develop and change ‘on the go’ as the project evolves. Documenting this can be complicated and you should refer any document you receive to your lawyer to ensure that you are getting what you expect and that the company producing the work owns it and warrants/guarantees it. I would say from our discussion that it sounds like you have a clear idea of what you want to achieve and that it will be possible to set this out in a linear way, rather than an ‘agile’ one and I would decline to work in that way as development costs can quickly escalate in such projects.
INTELLECTUAL PROPERTY LICENCES: You will need to consider and discuss with you technology provider who owns any trade marks, branding and/or technology you commission to be built for the business or use in it. It is vital is that the IP that the business will use belongs to it and this includes graphics, look and feel, trade marks and code specific to how the UI/UX and how the site operates. Under English law this work belongs to the person who creates it, not to the party who commissions the work and so a copyright assignment may be needed separately if it is not covered in the supplier terms.
SUPPLIER AGREEMENTS: If you will be selling third party stock you will need terms of business with these suppliers. Many will already have terms for ‘retailers’ that they will present to you, but there will doubtlessly be other elements that you feel need to be addressed such as delivery times, guaranteed supply, special offers and the escrow arrangements we discussed. The terms will need to be reviewed and amended. It may also be that you feel you should have terms that you send to suppliers so that all suppliers provide you with stock under the same arrangements and we can discuss the practicalities of this and how it fits with operation of the service.
CUSTOMER TERMS: Any customer who buys from you will need to accept your terms and conditions of sale. This will cover everything from payment to returns and any guarantees you will give. Much of the law relating to consumers gives them better protection when they buy online than on retail premises – essentially because the consumer does not see and try the goods before they buy them. Your terms therefore have to deal not just with faulty goods (and ensuring honesty around this), but also the “unwanted/change of mind” scenario.
PAYMENT PROVIDER/PROCESSING TERMS: these will be provided to you by your payment provider and there is limited scope to negotiate them, but it definitely should be considered, especially in relation to charge backs.
DATA PROTECTION POLICY: if your business is collecting and storing personal information – which it will be – then you need to state why the information is collected, where it is kept, and for how long. If you wish to use the information for marketing you must say so in the terms and allow customers to confirm that they want to be marketed to (“opting-in” to receiving email etc).
The above is not a complete list of every contract or policy that might be required, but at Lionshead we know that when you start a business we know it’s better to be ‘over advised’. At Lionshead Law we don’t work on hourly rates as it provides the lawyer with no incentive to get the work done quickly or even right first time! Instead we work either on fixed fees for specific pieces of work (such as drafting a contract) or retainers where we act as outsourced general counsel, providing advice and pitching-in with our experience whenever you need us.
Please contact us if you would like to find out how we can help you do business.