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Planning a startup can we prepare a legal agreement between partners


03-Dec-2023 (In Startup Law)

Dear Sir / Madam , I'm involved in a start-up, at present i am associated with a MNC company with good pay, as m leaving the company for start-up where investment and idea is basically is my friends, and Bussiness development will be my responsibility as of now company will be proprietary ( My Friend as complete sole proprietor ), but i was offered a part ownership in early discussion ( Verbal ), is it advisable to sign a legal agreement, my concern is since company being a proprietary if we sign a agreement will it hold good ?? and what percentage of company should one expect ?

Answers (2)

Answer #1
773 votes
Dear Querist It is very important to pen down all the understanding between the co-founders as the main purpose is not to bind anyone or hold an axe over the other but to maintain the relation and the understanding. Start-ups usually think that these agreements strain the relations with each other but the whole purpose is that the relations and friendship do not get strained. The reason I wrote all this is because we have dealt with many start-ups and we know how they think and feel. Legally it is an absolute requirement.
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Advocate Kanishk Agarwal

Adv. Kanishk Agarwal

LawRato Delhi | 5+ Answers
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Answer #2
630 votes
It is understood that the business is running as a proprietary concern. It appears that the concern would operate as such and you would take salary from such concern. In such a case, you would only be treated as an employee of the organisation and would for all practical purposes have the rights of an employee. Another agreement providing for terms does not sound feasible.
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Advocate Abhimanyu Jhamba

Adv. Abhimanyu Jhamba

LawRatoDelhi | 5+ Answers
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