Posted 04 May 2020, Editor's Desk
Legal Basics that Every New Business Should Know
The Companies Act of India was created in 1956 to ensure one thing, that a company is treated as a separate legal entity from the people who are running it. This was primarily done if due to any gap or removal of a member/partner, the company does not end.
When you are starting a company, there are many legalities that you should know about when you are planning to run a business.
1. Company Formation
The Companies Act, 2013 which is more refined and covers many more aspects of business than
the previous Act. It explains what type of a company you need to choose and run. According to the
Companies Act of India, you can choose between the following:
The companies Act, 2013 lays down the rules and regulations on how each of these firms can be set up and what are the legalities you need to follow
3. Raising Money: Checking financing options
There are 3 types of financing options that you can explore:
There are many forums where you can get a list of Angel Investors & Venture Capitalists who would invest in your business and claim a stake in your profits
The Government has also introduced many schemes and initiatives under which SMEs can apply for a loan
Like the Companies Act of India is needed to set up a company, similarly you need to abide by the Labour Laws when you are hiring for the company and formulating employee agreements
5. Dispute Resolution & Contracts
When you are starting a company and formalizing a structure it also important to know how contracts are formulated and if a dispute arises, how can you solve it.
The main aim is to:
It is advised to agree to an offshore arbitration where possible, if not then go for an Institutional arbitration with a neutral party. Try and keep it as simple as possible
If you are setting up a company and going to run a business, it is important to understand the know-how of the Companies Act 2013 because this sets the foundation of all the legalities involved in running and managing an organization.