Have you recently started up a business? Here are some key legal considerations going forward.

February 22, 2023

By Emily Shingler

Starting a new business can be an exciting time for founders, filled with numerous demands and challenges. While it’s natural to focus your attention on getting it up and running, it’s equally important to consider the legal protections that can impact your business’s initial success and safeguard it from disputes and competition.

Taking steps to protect your business in the early stages of its life cycle can save time and money in the long run.

Here are some tips and takeaways that you can implement to protect your business and brand:

Regulate shareholder relationships

The majority of start-up businesses will incorporate as a private company limited by shares; with the founders being the first shareholders. While a shareholders’ agreement isn’t legally required, it can protect a founder’s investment in the company. A shareholders’ agreement can regulate the relationship between shareholders, management of the company, ownership of shares, and provide for what happens if shareholders disagree with each other. One of the primary benefits of a shareholders’ agreement is that it can provide a clear approach in the event of a breakdown in the business relationship. By addressing these issues in advance, the agreement can help to avoid costly litigation in the future. A well-drafted shareholders’ agreement can be an invaluable tool for protecting the interests of all shareholders and ensuring the long-term success of the business.

Create a logo that can be registered as a trade mark

It is vital to ensure that your logo (or one similar to it) is not already registered or in use for the same, similar or related products/services. A quick search of the UK trade mark register can avoid unnecessary application fees. Even if a mark is not registered it can still attract protection and you may be liable for infringement if you are using a similar one. It is therefore important to carry out searches in your market area. For example, conduct internet searches, review trade directories and the companies register.

Implement bespoke terms and conditions

All businesses would benefit from a bespoke set of terms and conditions in order to protect their position with their customers; particularly e-commerce businesses as selling to consumers online is subject to additional consumer law requirements. Terms should ideally deal with issues such as delivery, returns and taking payments. Your terms should also be incorporated into your system and processes to ensure that your terms are brought to the attention of the customer before they conclude their order.

Protect your confidential information

Consider using non-disclosure agreements (NDAs), also known as confidentiality agreements, when disclosing ideas or commercially sensitive information to a third party, such as potential investors, partners or manufacturers. An NDA is a legal contract which outlines confidential material or information that the parties wish to share with one another for specific purposes. Common examples of information protected by an NDA include customer lists, business plans and technical processes. Without an NDA, there is a risk that others may use your ideas or material without your permission.

Businesses should also ensure it protects confidential information with its employees. A professionally drafted employment contract can ensure that confidential information, including business “know-how”, is protected not only during the course of employment but following termination of employment. It can also limit an employee’s ability to set up a similar business in competition. This may be particularly important for key or senior employees who have helped develop goods/services and have had access to sensitive commercial information.

If you need any advice with navigating any of the issues raised above, please contact Emily Shingler on eshingler@darwingray.com / 02920 829 118 for a free initial chat to see how we can help you.

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