Member Article

Legal advice for young entrepreneurs

No matter what part of the world you live in starting a new business is always a very exciting and often very rewarding process for the aspiring entrepreneur, whether young or old. This process however always requires careful start up preparation. Diligent legal planning and preparation are now more important than ever prior to beginning a new corporate or business venture. There are many necessary legal procedural steps to be taken which require compliance before that start-up dream can become a reality. All too often business professionals, in their eagerness to get started, put their entire dream at risk by failing to take what, in reality, are straightforward measures required to protect themselves from a legal perspective. They can find that, without sound legal planning, their inspirational business ideas are easily stolen or become frustratingly lost in protracted lawsuits. Such a troubling scenario, however, can be avoided by obtaining necessary but often straightforward legal advice.

New and even more experienced entrepreneurs should, as a matter of prudent business practice, consult with legal counsel during the planning stages of their new business. Most might not yet have encountered situations where they will have needed a solicitor, or might not even see them as necessary in the early days. Often at the inception of a new business venture it will not just be the business that is new but also the investment money that is usually the lifeblood of any new business. Businesses must protect themselves at every stage to ensure they are well positioned for anything in the future. A solicitor’s advice is always useful in ensuring that all the legal documents and policies are in place, ensuring a smooth and stress-free launch. There are a variety of documents where legal assistance provides commercial peace of mind; they can include business contracts, company formation, corporate finance, copyright issues and customer agreements.

Structuring is another major aspect which should be considered carefully. This will require determination of every possible business structure from partnerships to equity arrangements. In a business partnership, both partners share responsibility over the business and the partners are jointly and severally liable for the business debts. It is important for new business to plan out the business structure very carefully. Decide which form of business structure is best for them: sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, non-profit or cooperative. If it is partnership an agreement between the partners must be drawn up. If the business structure is to be a limited liability company then it will be useful to draw up a shareholders agreement which will set out terms for the partners conducting business through a limited liability company. This invites questions that people starting a business relationship may not yet want to consider, as it contemplates a breakdown in the relationship. However, an agreement can result in huge savings in cost, expense and headache further down the line. The documentation should also specify a business description, and details such as duration of the partnership and any binding terms and conditions, including under what circumstances the partnership may be dissolved, terminated or altered. Documentation may not cover every possible situation but it will at least address commonly occurring issues and protect your interests.

In the rush to bring to life the new and exciting business venture the very important issue of Trade Mark is often overlooked. It is not uncommon for new entrepreneurs to discover someone else or business has already registered their name. On the other hand, a company may also want to take measures to ensure their ideas or products have sufficient legal protection from others who may want to steal their ideas. A trade mark is a sign which can distinguish a company’s goods and services from those of its competitors. Once they have chosen the right logo, they must ensure they register the new company with the UK Intellectual Property Office. Failure to protect their assets through trade marking may result in significant damage to the business. In the ever-increasing global economy such legal protection should represent a high priority for any business operating not only in a domestic market but on a more international stage.

Crucially, a series of key changes to UK Employment Law were brought into effect over the summer which any prospective employer or company should be aware of, due to their impact on the commercial world and those contemplating or already immersed in corporate ventures. One of these changes was the replacement of Compromise Agreements with New Settlement Agreements. These agreements are used to document termination procedures with departing employees. This is a change in name only and will not affect the contents of the agreements or the validity of existing compromise agreements, but make it easier for both employers and employees to have off-the-record pre-termination discussions without concerns that any of it will be admitted as evidence in an unfair dismissal claim. This summer also saw the introduction of employment tribunal fees, which means any employee making a claim will now be required to pay a fee or to provide an application for fee remission. Lastly, a new cap has been introduced on unfair dismissal compensatory awards. The most any employee can expect to be awarded is now the lower of £74,200 or 52 weeks’ pay. The reform aims to give employers and employees more realistic expectations about unfair dismissal award levels. Given the new rules and regulations it is more essential than ever to consult an experienced legal counsel /solicitor to ensure your company operates within its constraints and takes advantage of the new legal provisions surrounding employment law.

Sarosh Zaiwalla,

Senior Partner at Zaiwalla & Co

When Sarosh first established the firm 30 years ago, it was the first and only Asian law firm in the City. Sarosh has acted for major Indian names, including a former Indian President and Gandhi’s family. Acting as Solicitor, Counsel or Arbitrator in over 1000 cases, Sarosh recently fought against the introduction of a secret court in the UK Supreme Court for the first time in its history, a case he ultimately won. Sarosh has also acted for the Chinese government and helped facilitate the handing over of Hong Kong.

In 1998, Sarosh was made a Freeman of The City of London by the Lord Mayor of London and in October 2002 he was given India’s Annual National Law Day Award by the Indian Prime Minister for his outstanding contribution to the field of International Arbitration Law. Sarosh has experience with both broadcast and radio media.

Sarosh is currently appointed as Arbitrator for various international commercial disputes.

This was posted in Bdaily's Members' News section by Sarosh Zaiwalla .