From my experience, most start-ups and even profitable smaller & medium size companies will usually be concerned about legal matters when it is too late – when they are sued; when action is taken for unpaid taxes; when their property is seized; when action taken against them by their employee for breach of employment law etc. Legal matters would be the last thing on their minds. Here are a few legal matters that you should prioritize:-
- Have an Agreement between the Founding Members / Investor
All too often, start-ups and small business fail due to internal matters ie. Disputes between founding members and / or business Investors. The same excuse I hear over and over again for not having such an agreement is that parties trust each other. Having an agreement is not just a matter of trust; an agreement lays down each other’s responsibilities, obligations, liabilities and exit strategy
- Know the Laws of your Business
You should know the laws that affect your business. Best start operating within the confines of law from the very beginning or risk spending hundreds of thousands on “repairing” your business to comply with the law.
- Know Employment Law
Having employees comes with responsibilities to ensure their welfare is taken care of and that it is done within the legal framework. I have heard of companies who unlawfully deduct from their employees pay; do not pay EPF upon their employee’s request etc. which are unlawful, even if both employee and employer agree on it.
- Protecting your Company Name; Logo; & Inventions
Your company name; logo & inventions can be protected under Intellectual Property law. You don’t want to have your company name; logo & inventions “stolen” from you, just as your company is growing and making a profit. By protecting your Intellectual Property, you may in turn, use it as a money making tool. Once protected, you may license it out and charge a fee for it.
- Know the Procedures to avoid potential disputes
From my experience, the usual reaction to a potential dispute would either be (i) be emotional and attend to it a confrontational & sometimes abusive manner or (ii) ignore it / sweep it under the carpet. Sometimes, without proper procedures, your staff may ignore something which could explode to a million dollar lawsuit. Even some owners may not know how to handle a potential dispute.