In recent years, with the rise of entrepreneurship, a large number of start-ups have been born. Then these companies need to abide by the law while operating. Many entrepreneurial friends have encountered a series of legal problems in the process of starting a business. So do you know what are the common legal problems of startups? Let me give you an answer. I hope I can help you. Welcome to read!
1 What are the common legal problems of startups?
1. Must the executive director and legal representative of a limited liability company be the same person?
A: Must the executive director and legal representative of the Company Law and the limited liability company be the same person? Article 13 stipulates: The legal representative of the company shall be the chairman, executive director or manager in accordance with the articles of association, and shall be registered according to law. Where the legal representative of the company changes, it shall go through the registration of change. ?
It can be seen that the legal representative is not necessarily an executive director, but may be held by different people.
2. What is the difference between an executive director and a chairman?
Answer: Article 45 of the Company Law stipulates that a limited liability company shall have a board of directors, with three to thirteen members; However, unless otherwise provided for in Article 51 of this Law. ? The board of directors shall have a chairman and may have a vice-chairman. The method for the formation of the chairman and vice chairman shall be stipulated in the articles of association. ?
Article 51 stipulates that a limited liability company with fewer shareholders or a smaller scale may have an executive director instead of a board of directors. The executive director may concurrently serve as the company manager. ?
To put it simply, a general limited company should set up a board of directors, and the board of directors should set up a chairman, while a small company with few people can set up only one director, that is, an executive director. It is impossible for the same company to have both chairman and executive director.
3. Can the same natural person be the legal representative of only one company?
A: China's Company Law does not restrict the same natural person from being the legal representative of several companies.
4. Can the legal person status of the same person holding 100% shares exist in multiple companies?
A: Individual shareholding 100% is a one-person limited liability company.
Article 58 of the Company Law stipulates that a one-person limited liability company as mentioned in this Law means that there is only one natural person shareholder or Article 59 stipulates that a natural person can only invest in the establishment of a one-person limited liability company. A one-person limited liability company cannot invest in the establishment of a new one-person limited liability company. ?
It can be seen that a natural person cannot exist in multiple companies as a legal person with 100% shareholding.
5. What seal does the company usually use? What are their functions and legal effects?
A: The company seal mainly includes official seal, special seal for finance, special seal for contract and private seal for legal person. Need to file with the industry and commerce, public security, bank or reserve and seal up according to relevant regulations.
The official seal of the company is a comprehensive seal, which can be used for tax registration, various administrative documents, certificates and contracts.
Special financial seal, which is used to stamp various bank vouchers, bills of exchange, checks, etc. , as well as financial related documents and materials.
Special seal for contract, used to sign the contract.
The corporate seal (non-corporate seal) is usually used for company registration, enterprise basic deposit account opening and cheque endorsement.
In terms of effectiveness, the effectiveness of the company seal is the same, representing the will of the company. However, if a special seal appears in a purpose that does not belong to it, such as the special seal for contracts is used to print checks, then its effectiveness will be flawed.
6. What kind of license do I need to open an e-commerce website?
Answer: If it is a B2C website, ICP is not mandatory as long as it is the record number of an ordinary website. According to national laws and regulations, selling things online belongs to offline transactions. The so-called business refers to whether the website itself has paid services, and the B2C website itself is free. If there is a paid business website, you need to apply for ICP, otherwise it is illegal. The registered capital required to apply for ICP business license is more than 6,543,800+0,000.
7. How to distribute the equity when several friends start a business in partnership? How many shares is appropriate for each investor in a startup company?
A: There is no mandatory provision in the law, which can be freely determined through consultation. In this case, the share distribution between * * * and the founder is not weighed according to the amount of capital contribution, technology and intellectual achievements in most cases. These technical factors are not all or even secondary.
Some teams pay great attention to these elements of equity distribution, but they still fall apart afterwards; Some teams beat their heads to decide the distribution of equity, but they have been United until the last moment of victory. This shows that the human factor is the most important. Fundamentally speaking, the team distributes shares in order to make the founders feel reasonable and fair in the process of distribution and discussion, so that they even forget this distribution afterwards and concentrate on being a company. This is the core and easily overlooked by the founders. Therefore, a piece of advice, no matter how complex and comprehensive the analytical framework and model of equity distribution are, will obviously help all parties reach a consensus, but it can never replace the establishment of trust. I hope the founder can talk openly about his ideas and expectations. Any idea is reasonable, as long as it wins the sincere recognition of entrepreneurial partners.
8. A limited liability company is established with multiple contributions, and one of the shareholders has differences with other shareholders and wants to quit. What should other shareholders do?
A: First of all, the company law stipulates that after the company is established, shareholders may not withdraw their capital contribution. Therefore, in general, withdrawal can be achieved through equity transfer. Article 72 of the Company Law stipulates that shareholders of a limited liability company may transfer all or part of their shares to each other. Shareholders' transfer of equity to persons other than shareholders shall be approved by more than half of other shareholders. Shareholders shall notify other shareholders in writing to agree to the transfer of their shares. If other shareholders fail to reply within 30 days from the date of receiving the written notice, they shall be deemed to have agreed to the transfer. If more than half of the other shareholders do not agree to the transfer, the shareholders who do not agree shall purchase the transferred equity; Do not buy, as agreed to transfer. Under the same conditions, other shareholders have the priority to purchase the equity transferred with the consent of shareholders. If two or more shareholders claim to exercise the preemptive right, their respective purchase proportions shall be determined through consultation; If negotiation fails, the preemptive right shall be exercised in accordance with their respective investment proportions at the time of transfer. Where there are other provisions on equity transfer in the articles of association, such provisions shall prevail. ?
At the same time, the Company Law also stipulates that under some special circumstances, shareholders who vote against the resolution of the shareholders' meeting may require the company to acquire its equity at a reasonable price:
(a) the company has not distributed profits to shareholders for five consecutive years, but the company has made profits for five consecutive years and meets the conditions for distributing profits as stipulated in this Law;
(2) The merger, division or transfer of the company's main property;
(3) Upon the expiration of the business term stipulated in the Articles of Association or other reasons for dissolution stipulated in the Articles of Association, the shareholders' meeting will adopt a resolution to amend the Articles of Association to make the Company survive.
9. What are the nodes of angel investment, VC and PE participating enterprises? What role do they play?
Answer: angel investment: the company is in its infancy and has no mature business plan, team and business model. Many things are being explored. Therefore, many angel investments are acquaintances and friends who invest based on their trust in people. Acquaintances and friends are angel investors, and their role is often just to help entrepreneurs get start-up funds; The investment of mature angel investors or angel investment institutions will not only help entrepreneurs find the direction, provide guidance (including management, market and products), and provide resources and channels.
VC: At the initial stage of the company's development, there are relatively mature business plans and business models, which have already started to make profits, and some VCs will also require profit or income scale. At this time, the entry of VC is very important, which can play a role in enhancing the company's value, including helping it gain recognition in the capital market and laying the foundation for subsequent financing; Enable the company to obtain funds to further explore the market, especially when it is most necessary to burn money; Provide certain channels to help the company expand its market.
PE: Generally speaking, in the Pre-IPO period, the company has matured, and the company has the basis for listing, reaching the income or profit required by PE. Usually provide the necessary funds and experience to help complete the restructuring structure required by IPO, provide the funds needed before listing financing, and help the company sort out its governance structure, profit model and fundraising projects according to the requirements of listed companies, so that it can be listed at least within 1-3 years. At this time, it is necessary to be cautious when choosing PE. It is not particularly necessary for a PE that has no special word of mouth or means to help the company solve the listing problem, or a PE that cannot provide a large amount of funds to solve the capital demand before listing.
10. How much equity do angel investors generally hold in startups?
A: Angel investment generally does not require holding. 10% is a general scale, and less than 5% or more than 30% is a low probability.
2 legal issues that should be paid attention to at all stages of startup companies
First, the initial stage
1, partnership agreement
Does the startup team need to sign before the company is registered? Shareholder agreement? This is the cornerstone of future company operations. Because most of the original entrepreneurs are close relatives, classmates or friends, they are often ashamed to talk about the distribution of power, interests and responsibilities, and when preparing to start a business, they pay more attention to how to develop their business externally than to internal construction. The company's foundation is not good, and others are castles in the air, which is insignificant.
After the initial passion, the company is likely to have disputes on the above issues after it grows stronger or encounters setbacks. If it cannot be properly handled, it will lead to failure in the middle of the venture.
In order to effectively avoid such problems, it is required to define the division of rights and obligations among entrepreneurs through institutional documents such as partnership agreement or articles of association at the beginning of starting a business. These institutional documents can effectively avoid and solve the problems of unfair distribution of benefits and uneven debt burden in the future.
Entrepreneurs can make clear agreements on their respective interest ratios, their respective debt ratios, their respective work contents, how to introduce new venture partners, and the exit mechanism. In the event of a legal dispute, this is a powerful weapon to protect the legitimate rights and interests of all people. It is recommended to consult a professional lawyer in the process of making an agreement.
2. Labor and capital issues
Without a standardized company system, it is easy to cause labor disputes. Most start-up companies have simple organization, insufficient funds and no standardized management system, which determines that the first problem faced by start-up companies is not the problem of making money, but whether they can survive and how long they can live. Entrepreneurs focus on reducing costs and creating profits. On the contrary, the original intention of the state to formulate the labor contract law is to protect the interests of workers, which is contradictory to the needs of enterprises to reduce costs during the start-up period. Therefore, it also determines that the demand of enterprises for law is mainly reflected in solving employee labor disputes.
Second, the growth period
The enterprise has experienced the difficulties in the initial stage, and finally survived. With stable customers, it began to step on the right track and enter the growth period. During this period, the company's internal management is relatively standardized. At this stage, the company mainly coordinates foreign commercial relations, so the demand for law is mainly manifested in contract affairs. For example, do you need to sign a contract with a dealer? Product sales contract? Or? Sales contract? Does the service industry need to sign contracts with customers? Service contract? Or? Consulting contract? . Does the company need to sign a loan from the bank when its own funds are insufficient? Loan contract? , or do you need shareholders to sign IOUs? Shareholder loan agreement? .
The company may introduce new investors at this stage, even professional investors like VC/PE. If it's just an ordinary investor, why not sign it? Equity transfer agreement? Yes, but if it is VC/PE, do you need to sign a series of complicated ones? Investment agreement? And adjust the company structure. At this time, professional lawyers are needed to assist the company in handling special legal services.
Third, maturity
After the previous rounds of big waves, the enterprises that can stay are already experienced masters, and they have the strength to annex small companies or introduce a large amount of investment to achieve scale expansion. This stage is mainly reflected in two aspects: financing and investment. Enterprise financing mainly uses the capital market, that is, stock and bond financing.
Enterprise expansion mainly adopts three business models: diversified investment, strategic investment and M&A expansion, which will involve investment and financing scheme design and legal risk analysis. Equity purchase agreement? Or? Asset purchase agreement? The terms of these contracts are very complicated, and lawyers and financial personnel need to conduct due diligence before signing the contracts, so the company needs to hire experienced M&A lawyers to provide specialized legal services for M&A. ..
In addition to external lawyers, the company also needs to establish a legal department to handle daily affairs, business negotiations, drafting legal documents, handling labor relations and legal risk early warning.
Fourth, the listing period
In the listing stage, it is necessary to sign very complicated professional service contracts with investment banks, accountants, lawyers and public relations companies. At this stage, the company must have hired a professional securities lawyer, so I won't go into details.
3 How to distribute the equity of the startup company more reasonably
Equity distribution and egalitarianism are unhealthy structures. Some founders are full of idealism and always want to own equity and average points. It is more common for three founders, each with more than 30%, or for two founders with 50-50 points, but these are unhealthy structures. The reason is that no one in the team keeps his word and is prone to problems in the face of major decisions. Therefore, startups need to adjust their corporate structure to a relatively healthy state before financing.
Another issue involved in equity allocation is the option plan, that is, the equity incentive plan. It is common to issue options after Round A in the industry, usually between 12.5%- 17.5%, rarely reaching 20%. And according to the previous case, 15% is after investment. For example, after one round, VC accounts for 20%, option 15%, and all founders account for 65%. In this way, the founder can take the lead and control the main direction of the company.
In addition, when distributing shares to employees, the usual practice is to set a probation period of one year or half a year, and only after passing the probation period can you get options. According to the practice of internet companies, it is generally distributed to employees in four years, which is 25% per year. In our company law, there is no option. At this time, we usually stipulate the employee's equity in the investment agreement, such as 15% held by a founder, and gradually implement the employee's industrial and commercial change registration after two years, or set up a subsidiary as a platform for equity incentive in the future. Unfortunately, the company registered its employees as shareholders in industry and commerce from the beginning.