![]() ![]() The Startups are never recommended to make a special purpose vehicle for one particular venture with a particular set of people. The variation in the rights and privileges of the shareholders in a kind of share capital or calss or classes therein may include the difference in voting rights, voting rights disproportionate to the paid-up value of the shares held, voting rights for specific purposes only, no voting rights at all, different rights for entitlement of dividend or such other rights as the member may determine through special resolution. A company limited by share may have more than one kind of share capital and may have different classes of share under each kind. ![]() The overheads for a limited liability company might include a chartered accountant to conduct audit of its accounts and a retainer lawyer as a mandatory statutory requirement.Īnother advantage of a limited liability company is the equity injection by having variation in rights and privileges of subsequent investors in an organization. Nevertheless, a lot of people are reluctant to form a limited liability company due to its registration requirements and subsequent filing requirements with the regulator which may incur certain additional overheads. A limited liability company is an independent juristic person, therefore, the title of the newly developed IP can be easily vested in the company without any hassle albeit subject to necessary agreements between the shareholders and/or employees (as the case may be). The most ideal way of establishing a Startup is to form a limited liability company. This anomaly can be covered by giving a right to vest the title of IP in investor which, in most circumstances might not be acceptable between the parties. Another issue which may erupt in the eventuality of dissolution of partnership is divisibility of the IP title, specifically in a scenario where IP is not fully mature or cannot be sold out in the market and it becomes really difficult to get it valued. Therefore, in case of any dispute or dissolution of partnership the dispute as to title of IP becomes questionable and the interest of the investor (depending on the sort and extent of the investment) is jeopardized. However, the property of a partnership vest in the partners jointly and severally. The IP is owned by its creator unless there is an agreement to the contrary.In cases of Startups it is usually agreed to vest the title of an IP in the name of the legal entity. Specially in the cases where one partner is an investor and not interfering in day to day affairs of the venture.Īnother issue which might erupt in a partnership structure is the entitlement of any Intellectual Property (“IP”) created in the course of business. However, the liabilities of the partners in a partnership concern are joint and several which may expose any one or more partner(s) to third party liabilities because of the acts or omission of other partner(s). A Startup in Pakistan may be structured in the following ways:Ī registered partnership is the simplest way of entering into a Startup venture. The legal structure of a Startup venture mainly depends on the long term vision of the parties entering into such venture and the kind of venture in itself which is being entered into. Thus ensuring a stable business platform wherein disputes can be prevented, the liabilities are defined and the risks can be mitigated. Secondly, the aim is to safeguard their business interests. First and foremost is to clearly layout the rights and obligations of the parties working under ‘Startup’ umbrella. The objective of such a legal structure is twofold. Devising a legal structure for a ‘Startup’ is essential, if it is to be made viable and functional. In Pakistan the ‘Startup’ trend is gaining momentum as entrepreneurs with creative ideas are seeking funding solutions to generate economic activity and new revenue streams. In fact, it could be apt to place the “Start up” phenomenon at the epicenter of a vibrant entrepreneurial cultural. The term “Startup” is in usage for describing a new business venture wherein, entrepreneurs and/or companies harmoniously combine their skills, ideas and financial resources to generate new business activity with higher returns. ![]()
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