Why a start-up must hire a lawyer

When a company is in its budding stage, it is necessary to follow all the rules and procedures of the law for its efficient growth and development. A right lawyer can take up the company to new heights and ensure its smooth passage through some rough times. It is important to know the role of a lawyer in a start-up organization.

What to look when hiring a lawyer?

A start-up is not highly strong on financials and therefore, must not concentrate on hiring a lawyer of high expertise with enormous legal fees but a good, knowledgeable and responsive lawyer with whom the company is compatible to work. The lawyer must be interested in the work of the company and the company should trust him with all the work while it enjoys working with him. Referrals are a good option.

A lawyer helps in fixing the problems before its too late. He knows a lot many things from which the company benefits.

When does a start-up need lawyers?

·         Company Formation – When a company is to be formed, various agreements are to be drafted, MoA and AoA are to be incorporated, corporate structure is to be defined;

·         Founders – When a company is formed, regulating the rights and obligations of the founders and their shares would be a piece of cake if a lawyer was looking after such affairs;

·         Intellectual Property – It is better to engage a lawyer if intellectual property is the core of the business and the company specifically deals in the same;

·         Laws in general – A founder should pay all its taxes and not violate any laws for its boosted growth and for that, a lawyer is necessary;

·         Negotiating contracts – Negotiation upon contracts between customers, suppliers, license agreements, etc is necessary for which a lawyer comes into action;

·         Employees – Change in employment agreements and hiring new people does require some legal advice;

·         Investments – Documents relating to investments are pretty hazy to layman and therefore, hiring lawyers would be the best judgment;

·         Dispute Resolution – Disputes arising between companies would consequently involve lawyer consultation and to have one beforehand is a better sort of preparation as he knows that in and out of the company.

Important Things to Remember

Ø  You have to ponder whether you need a full-time lawyer or an independent lawyer to look after the legal affairs of the company;

Ø  A lawyer who doesn’t understand your business would not be adequate to represent you in the professional world;

Ø  Surprise costs of lawyers would eat away from your business;

Ø  Don’t hire a lawyer when police is standing at your gate: hire him sooner;

Ø  Ensure the lawyer is not working with your competitor also;

Ø  Meet with your lawyer on a regular basis.

How Legal Resolved is changing the legal services scenario in India

What is Legal Resolved?

Legal Resolved is an online legal help portal which aims at providing legal aid to the society via multifarious methods. One thing that interests its user is that it covers both lawyers and clients. It is one of the most convenient ways to get in touch with the lawyers of District Courts, High Courts, Supreme Court and numerous Tribunals. Being a stern believer of the concept of quality, Legal Resolved provides free legal answers in a way which is cost effective.

How does it work?

Active in numerous cities like Bangalore, Chennai, Delhi, Chandigarh, Pune to name a few, Legal Resolved has maintained a network of lawyers throughout the nation. From availing divorce lawyers to getting legal opinions, Legal Resolved tends to maintain a sense of flexibility for its users. The users may get in touch with a lawyer without having to step out of their homes. One of the most alluring features of this online platform is its cost effectiveness. The services are provided at a reasonable cost and in certain cases free of cost.

It’s role in legal services market

The lawyers connected with Legal Resolved deal in various areas like civil law, criminal law, family law, taxation, consumer disputes, cyber law etc. These lawyers do not only provide legal advice but also give you an insight into the budget estimate of your case.  Besides being able to read legal articles the users may also post questions on varied and distinct legal subjects. Thus, its approach is not only limited to providing legal aid and giving insight into legal rights but through its article section, Legal Resolved stands as a beacon of opportunities for upcoming legal writers and readers as well.

Important Do(s) and Don’t(s)

·         Be direct and precise in your queries for better outcomes.

·         Do not use the ‘lawyer referral service’ approach while using this portal. 

Divorce Risk Analysis

Divorce is the dissolution of marriage in a legal manner sanctioned by a competent court. It is not just a legal phenomenon but a psychological occurrence as well. It triggers a whole lot of risks for either or both the partners like depression because of loneliness, radical changes in the lifestyle, loss of hope, loss of children, etc. Nonetheless, the rate of divorce is still pretty low in India.

The Affected People

 The children (if any);

 The partners themselves;

 Parents of both the partners;

 Siblings of both the partners.

Reasons behind Divorce

 Woman unable to bear child (especially a son);

 Not enough dowry is given by wife’s family;

 Adultery;

 Desertion;

 Incurable disease (mental, physical)

 Second marriage

 Husband guilty of a heinous crime (rape, murder, sodomy)

 Child marriage

 Mental or physical cruelty (danger to life or limb or health of spouse)

 Uneducated husbands

Divorce Risk Analysis

After the husband/wife sends a legal notice for divorce to his/her counterpart, there are numerous high-end risks that may be irreparable in the future. If the spouse replies to the notice in affirmation or the court grants divorce, the following may happen

• The spouses invite social trauma and lowered social status for the whole family;

• Husband may be required to pay maintenance for lifetime;

• Half of the total property of husband would go to wife;

• Poverty (for the spouse who is not financially sound);

• Loneliness and Depression;

• Question as to who will get the custody of children would be a mind-boggling issue;

• Remarriage is quite difficult and cumbersome in Indian society. Even if the spouse remarries, the step-father or step-mother may not be welcoming for the children;

• One study also suggests that children of divorced parents consider divorce as the perfect solution to marital problems;

• Studies have found that children with divorced parents show lower levels of success at schools, poorer and deranged behavior, the number of emotional problems, low self-esteem, difficulties in making social relationships, etc.

Statutes Governing the Divorce Law in India

Hindu Marriage Act, 1955

Special Marriage Act, 1954

Divorce Act, 1869

Parsi Marriage and Divorce Act, 1936

Important Do(s) and Dont(s)

• Don’t opt for divorce for petty marital problems;

• Contact a divorce lawyer for legal consultation or seek online legal help from top divorce lawyers.

SC refuses to stay Parrikar Oat taking ceremony

On March 14^th, 2017, the Hon’ble Supreme Court of India refused to stay the oath taking ceremony of Manohar Parrikar before the Goa Legislative Assembly to be sworn as the Chief Minister of Goa. Furthermore, it ordered a floor test to be held on March 16^th, 2017.

Where it all began

At the completion of Goa Assembly elections on 40 seats, Congress party stood at 17 seats, BJP at 13, Goa Forward Party (GFP) at 3, Maharashtravadi Gomantak Party (MGP) at 3, Independent numbering 3 and NCP at 1. BJP got support from GFP, MGP and two independent MLAs and claimed majority before the Governer of Goa. Mridula Sinha, the Governor of Goa, invited BJP to form the government in the state. Congress filed the petition before the Supreme Court challenging the decision of Mridula Sinha.

Contentions of the Parties

Senior Advocate Abhishek Manu Singhvi, appearing for Congress, contended that the Governor failed to adhere to the mandates of the Constitution of India and acted in a mala Fide and arbitrary manner as he should have invited Congress, i.e., the single largest party in Goa to form the government. They also contended that BJP employed a late-night political maneuver and defeated the mandate of the people which was in favor of Congress.

Senior Advocate Harish Salve, appearing for Mridula Sinha, contended that the Governor was convinced of BJP’s majority while on the other hand, Congress failed to prove its majority. He also stated that the floor test will happen as soon as possible. Moreover, the swearing-in ceremony should go as planned, on 14^th March at 5 p.m.

The Verdict

A three-judge bench led by Chief Justice of India J S Khehar observed that there is no rationale for staying the oath taking ceremony. It further stated that all the formalities required by the Election Commission to be completed by 15^th March and the floor test to prove the majority should be conducted on 16^th March at 11 a.m. Supreme Court cracked down on Congress by pointing out that “The Congress don’t have the numbers or else it would have proven its majority before the Governor. Everything is lacking in their plea and they haven’t approached the Governor to form the government.” It finally directed the parties to appoint a ‘Protem’ speaker to conduct the floor test.

Shareholder Agreement (SHA)

A company having equity investors must have an SHA which acknowledges their contribution in a safe and secure manner. A Shareholder Agreement is a contract between the shareholders of a company which helps to establish a fair professional bridge between the stakeholders and the operation of the company.

Key Terms & Conditions of a Shareholder Agreement

• Parties to be defined;

• Business activity and its scope to be outlined clearly;

• Authorized and Paid Up capital to be defined;

• Issuance of further capital must be through the written consent of the shareholders;

• Rights and Obligations of the shareholders;

• Rights of the shareholders to appoint and remove the Board of Directors. They can also appoint themselves to be the Directors;

• Board Meetings & Shareholders’ Meetings;

• Rights to appoint a Quorum, voice a VETO, etc;

• Resolutions regarding nature and business activity undertaken by the Company, taking up loans, declaration of dividends, etc. should be taken through the written consent of the Board of Directors and Shareholders only;

• Appointment of auditors by the shareholders and their removal;

• Shareholding Threshold for enjoyment of rights under SHA;

• The power to sell the shares should not be over-amplified but also shouldn’t be undermined – the shareholder desiring to sell his shares should first express his desire to the other shareholders and if they are not interested, he should be allowed to sell it to any other interested party;

• Transfer of shares and lock-in period including right of first refusal, preemptive rights, buy-back rights, right of the first offer, etc;

• Governing Laws and jurisdiction of competent court;

• Non-compete and non-solicitation clause;

• Dispute Resolution – preferably arbitration clause.

Statutory Law References

Indian Contract Act, 1872

The Companies Act, 2013

Securities Contracts (Regulation) Act, 1956

Depositories Act, 1996

Landmark Judgments

V. B. Rangaraj v. V.B. Gopalakrishnan, AIR 1992 SC 453

Messer Holdings Limited v. Shyam Madanmohan Ruia, [2010] 159 Comp. Case 29 (Bombay High Court)

Russell v Northern Bank Development Corporation Ltd, [1992] 1 WLR 588

Important Do(s) & Don't(s)

• Lawyer consultation or online legal advice should be the preferred way of drafting an SHA.

• Neatly draft the Articles of Association while your company’s incorporation and not just copy-paste them.

• SHA does not bind third parties unless their affairs form part of public domain.

World’s Most Expensive Company Settlements

Business and competition are the phases of the same coin. There is cut throat competition to expand the business and it is becoming harsher day by day in the globalized World. Every company wants to become a global brand so that its presence can be appreciated world- wide in every class of consumer. The mergers and acquisitions are one of the strategies which followed by the companies to expand its horizons. The ownership of a company is acquired by the other company dealing with the same type of services or products. A legal adviser’s consultation is very crucial to facilitate a merger or acquisition. Let’s have a look on the recent settlements which happened between two companies-

 British American Tobacco Co. is going to acquire R.J. Reynolds American Tobacco Co. – 

British American Tobacco which is based in London has entered into an agreement to buy the stake in Reynolds American, based in Winston-Salem, N.C. for $49 billion. The deal is also subject to shareholders and regulatory approval. It is expected to complete in the third quarter of 2017. 

Reynolds American reported sales of $10.7 billion in 2015. British American Tobacco reported revenue of $15.8 billion, in 2015. The purchase would create the world’s largest publicly traded tobacco business, based on net sales.

 Chem China deals with Syngenta AG-

China National Chemical Corporation’s $43 billion offer for Syngenta AG., based in Basel, Switzerland was China’s biggest overseas deal announced last year. The takeover announced a year ago, is one of a trio of mega-deals that would reshape the global agrochemicals industry. The others are Dow Chemical Co.’s bid to merge with DuPont Co. and Bayer AG’s agreement to buy Monsanto Co. The combined transactions would whittle down six industry players to three giants: one American, one German and one Chinese. Syngenta AG said the U.S. Federal Trade Commission has asked for more time to review it's $43 billion takeovers by China National Chemical Corporation. Chem China filed for U.S. approval in January 2016. Repeated delays in the approval process, which has involved authorities on four continents, have pushed back the expected closing date for the deal. Companies authorities are hopeful that Merger could still win approval before April 12 EU deadline.

 The Shire completed merger with Baxalta-

The Shire has completed it's $32 billion mergers with Baxalta, creating the global market leader in rare diseases and other specialized disorders.

The Shire projected that the combined company would generate approximately 65% of its total annual revenues from its rare disease products revenues the company has forecast as rising to more than $20 billion by 2020.The combined company would consist of more than 22,000 employees across more than 100 countries, as well as more than 50 programs in clinical development.  

 Abbott completes the acquisition of St. Jude Medical-

Abbott has completed the acquisition of St. Jude Medical Inc., establishing the company as a leader in the medical device arena. Together the company will compete in nearly every area of the $30 billion cardiovascular market and hold the No.1 or 2 positions across large and high-growth cardiovascular device markets.

SoftBank to Buy Britain’s ARM-

In the year 2016 Japan's SoftBank acquired ARM Holdings for $32 billion, Softbank has agreed to acquire ARM Holdings, the giant semiconductor firm of U.K that supplies part of the chip design used in Apple iPhones, ARM the largest London-listed tech company by market value. ARM has a major presence in mobile processing. Its processor and graphics technology is used by Samsung, Huawei, and Apple in their in-house microchips.

 Microsoft tied up with LinkedIn- 

Microsoft acquired LinkedIn for $196 per share in an all-cash transaction valued at $26.2 billion. LinkedIn is the world’s largest and most valuable professional network and continues to build a strong and growing business. LinkedIn, based in Mountain View, California, will retain a distinct brand, culture, and independence, according to Microsoft, and LikendIn current CEO Jeff Weiner will remain in his role.

"LinkedIn and Microsoft really share a mission" of helping people work more efficiently and "There is no better way to realize that mission than to connect the world's professionals," said Microsoft CEO Satya Nadella. 

 Acquisition of  Tyco International by Johnson Controls-

Johnson Controls Inc., a U.S. maker of car batteries and heating and ventilation equipment, acquired Ireland-based peer Tyco International Plc., in a $16.5 billion deal. 

By uniting Johnson Controls, the number one provider of building efficiency solutions with Tyco International, the number one provider of fire and security solutions, the new company is uniquely positioned as a leader in products, technologies and integrated solutions for the buildings and energy sectors.

Employment Contract

An Employment Contract is a legal agreement which delineates the terms and conditions of employment between an employee and an employer such as wages, duration of works, non-compete procedures, etc. They are usually signed and executed at the time of the inception of employment. There are majorly three types of employment contracts: -

* Full-time employment contract (FTEC)

* Part-time employment contract (PTEC)

* Freelancer employment contract (FLEC)

Key Terms & Conditions of an Employment Contract

• Definitions and Interpretations;

• Acceptance of employee by the employer for the job and acceptance of job by the employee;

• Responsibilities and obligations involved in the job;

• Duration of probationary period and salary during that period;

• Salary including Basic, HRA, Medical Allowance, Education Allowance, etc;

• Status of job: Full time, part time or freelancers;

• Place of work;

• Date of starting and ending of job;

• Working hours in a day and working days in a week (for FTEC and PTEC) or assignment completion basis (for FREC);

• Overtime (for FTEC and PTEC);

• Payroll schedule: on a daily, weekly, biweekly, semi-monthly, monthly, per piece of work, etc;

• Refunds for calls travels carried out in the course of employment;

• Holidays and Paid leaves in a year;

• Unpaid leaves and exceptions to it;

• Perquisites;

• Deductions;

• Required travels: once in a week, twice in a month, 10 times in a year, etc;

• Policies and standards;

• Confidentiality and Non-Disclosure;

• Non-solicitation which may hinder the company’s interests;

• Provident Fund

• Change in duties and remuneration would not make the present contract invalid;

• Prior notice of resignation;

• Termination of employment by the employer;

• Indemnification;

• Governing Laws;

• Dispute Resolution;

• Schedule A – Job description;

• Schedule B – Confidentiality and Non-Disclosure agreement.

Statutory Law References

Sec. 2(h) & 27 of the Indian Contract Act, 1872

Industrial Disputes Act, 1947

Payment of Gratuity Act, 1972

Industrial Employment (Standing Orders) Act, 1946

Factories Act, 1948

Payment of Wages Act 1936

Minimum Wages Act 1948

The Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013

Employees' Provident Fund and Miscellaneous Provisions Act 1952

Landmark Judgments

Diljeet Titus v. Mr. Alfred A. Adebare and Ors. 2006 (32) PTC 609 (Del)

Niranjan Shankar Golikari v. The Century Spinning and Manufacturing Company Ltd. 1967 AIR 1098

Desiccant Rotors International Pvt. Ltd v. Bappaditya Sarkar & Anr, Delhi HC, CS (OS) No. 337/2008

Important Do(s) and Don't(s)

• Contract should be signed and executed at the time of beginning of employment;

• Lawyer consultation or online legal advice should be the priority before executing such contract;

• Bond for a minimum time period of employment should be avoided as it constrains the employee to be with the company even if the work is contrary to his expectations;

Non-Disclosure Agreement (NDA)

A Non-Disclosure Agreement is a contract which enables the parties to the contract from sharing any piece of confidential information or knowledge shared between them for the purposes of business or any other kind of access but restricts such sharing to any third party to such contract. 

There are two types of NDA in practice:

 One-way NDA – Casts the obligation of non-disclosure of information on one party only;

 Two-way or Mutual NDA – Obligation on all the parties to the NDA.

Terms & Conditions of one-way and two-way NDAs are same for both with the only difference that in the latter, the obligations apply to all the parties to the contract.

General Terms & Conditions required in an NDA

• Confidential Information and its scope to be defined;

• Obligation of Non-Disclosure of the information to any third party without the permission of the party sharing such information;

• Application of NDA to apply to all the employees and directors of the recipient company;

• Exclusions/Exceptions to NDA for sharing the information to a third party;

• Notice of any unauthorized disclosure or loss is to be sent by the legal recipient of such information to the other party;

• Use of Confidential Information is to be “As is” and it is not be construed as a license or assignment of such information or any intellectual property. Moreover, the recipient is prevented from selling or registering such confidential information without prior authorization of the other party;

• No reproduction of such information without the authorization of the providing party;

• Time duration of the contract;

• Action was taken upon breach of the contract and Injunctive Relief;

• Governing law to be mentioned;

• Dispute Resolution mechanism to be stated;

• No Assignment to be carried out by the recipient without the authorization of the other party.

Statutory Law References

Sec. 2(h) of the Indian Contract Act, 1872.

Art. 39.2 of WTO Agreement on TRIPS.

Important Judgments

• John Richard Brady and Ors v. Chemical Process Equipments P. Ltd. and Anr, AIR 1987 Delhi 372.

• Mr. Anil Gupta and Anr. v. Mr. Kunal Dasgupta and Ors, 97 (2002) DLT 257.

Important Do(s) & Don't(s)

• Lawyer consultation or online legal advice is preferable to remove any illegalities and ambiguities;

• The information is to be protected for eternity, even after the expiration of the contract unless authorized by the disclosing party;

• Insert a stringent penalty clause;

• It is preferable to have a two-way NDA as it keeps the information flow and protection balanced.