Open Source Startup Legal Documents

 

Fundraising & Capital Structure

 

Founders Agreement

A founders agreement is a critical document outlining the relationship between founders as they are most important stakeholders of a startup. Imagine a scenario, where one of the founders quit a startup in short time owing to disputes or change of plans or anything else. If he/she refuses to return their shares back, it may lead to greater troubles for continuing founders. A formal agreement helps address multiple concerns including reverse vesting, right of first refusal, drag along, tag along rights etc. in an agreed manner.

 

Term Sheet for Funding

Term sheet captures most important terms of a proposed investment. This includes company's valuations and time frames to close on items like due diligence and receipt of investments, restrictions on the transfer of shares, list of items requiring investor approvals, non-disclosures etc. This serves as a mini SSSHA for any investments and the terms agreed here defines the shape of SSSHA.

 

Share Subscription and Shareholders Agreement (SSSHA)

SSSHA captures the complete terms of a fundraising in detail. This comes handy when you have raised money and need to enter into a formal agreement with investors. This defines the role of various stakeholders (investors, founders and any other existing shareholders) and restrictions associated with everyone's stakeholding e.g. right of first refusal, drag along & tag along rights, approvals needed for important decisions, non-disclosure and non compete clauses, lock-in period for founders etc.

 

Compulsorily Convertible Debt Agreement (CCD Agreement)

A CCD Agreement helps to capture terms of raising proposed amount as debt and compulsorily converting it to equity/ preference share at a later date. CCDs gained significant traction among startups as it may help to defer/ mitigate the popularly infamous "Angel Tax" along with deferring valuations of the company to an event or a milestone based trigger.

 

Share Certificate Template

Use this template to issue share certificates to various shareholders. You should also pay a stamp duty on the share certificates as per prevailing laws. Please consult with your lawyer, CA or CS for the amount of stamp duty to be paid and the logistics involved in making such payments. Please exercise caution and not issue any share certificates without paying appropriate stamp duties on them.

 

Startup Cash flow Template

This template can be used to prepare the existing and projected cash flows for your startup. This helps to formally structure your cash inflows and outflows and evaluate gaps and the amounts needed for your next round of funding. As investment discussions get serious, the investor will look at your cash flows to evaluate the terms of the deal.

 

Human Resources & Payroll

 

Employee Offer Letter

This template is useful when hiring a full-time employee. It covers aspects of engagement, reporting, non-disclosure, IP assignment, termination and also broader HR policies of your startup and detailed salary structure. It is important to execute formal documents and keep in your HR records as they have significance from the statutory perspective, labour laws and is an important due diligence metric. Please complement this document with an appropriate NDA.

 

Non Disclosure Agreement (NDA) - For Employees and Contractors

This document covers various aspects of maintaining the confidentiality of information and data while working for your startup. It also covers aspects of IP invention and assignment, restrictions, responsibilities and roles of both sides (employee/ contractor and the company).

 

Contractor/ Consultant Agreement

This template comes handy while hiring a consultant or a contractor either part time or full time. It covers aspects of engagement, payments, termination and non-disclosure. It is important to execute formal documents and keep them in your HR records for future use during due diligence, the safety of IP and Confidentiality, Statutory audits etc. Please complement this document with an appropriate NDA.

 

Employee Stock Option Plan (ESOP)

This document outlines features and details about the Employee Stock Option Plan for a startup. Covers major aspects like vesting schedules, restrictions on transfers, timelines for exercising and expiry of options etc. This document covers company wide ESOP plan and should be formally approved by the Board before implementing. This should be accompanied by a Grant letter which is customized for each employee.

 

ESOP Grant Letter

Customized grant letter template for each employee. This includes details about the number of options being granted, exercise price and exact vesting schedule along with any custom terms and conditions that are applicable to a specific employee.

 

Employee Handbook

An exhaustive book about various practices and policies about your company like non-disclosure, social media, sexual harassment, workplace safety, communication policy, about leaves and holidays etc. It's a great way to formalize various policies and communicate to employees. It also helps employees know about most of the policies and practices about your startup and helps in better compliance by them.

 

Salary Structure Template

An easy way to structure salaries for your employees. It offers few tax optimal structures for efficient tax planning and higher take home for employees. It always helps to give those extra bucks in your employee's hands. Please consult your CA or tax expert to ensure compliance with ever-changing tax laws before implementing the structure.

 

Terms of Use & Privacy Policy

 

Terms of Use

This document helps to define the terms of use of your website, software, app or mobile app. It includes various terms governing your relationship with your customers, restrictions on the use of various features, privacy concerns, data use and storage policies, cookies, 3rd party tools and services that you deploy, roles and responsibilities of customer, company and 3rd party providers etc.

 

Privacy Policy

This pertains to various information and data that you collect from your users either directly or indirectly and how you use that data. Privacy is a big concern for all users and great policies to protect your user's privacy can go a long way in defining adaption of your product or services.