What are the legal requirements to begun a start up

Is it legal for a startup to provide an online platform service to its user to - * create collective savings group, contribute money equally (monthly/weekly) and the collected money pot is randomly given to a user each month. The cycle continues till everyone is paid the collective money pot once, then they can choose to continue the circle. The user has an option to either transfer the money back into their bank account (bank transfer) or do shopping on affiliate e-commerce shopping sites for the collected amount as a voucher.

Answers (3)

110 votes

This would require a detailed analysis as your business closely resembles a chit fund which require permissions from the authorities to operate. Further, you will also need to look at compliances under the payments and settlements act since you intend on using vouchers. It would be best to seek a detailed legal opinion on your precise business and payments model before venturing into any such businesses as you may face several legal complications later. This would be a worthwhile pursuit as your idea appears to be new and innovative.

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56 votes

Yes it is; as long as the activities of a start up are not akin to banking services. Advise you to get your business model verified in detail once it is ready. As of now, from the description that you have given, it looks fine. I have my doubts on the implementation of this model which is somewhat like a online kitty! People may choose not to go ahead with them successive rounds.

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81 votes

Well this question sound vague , first of all if its related to equity crowdfunding is not allowed in India, the model you are referring to work in USA & Europe. SEBI & FEMA will not allowed you to collect money from other than shareholder and Investment angel/VC etc. Other part suggest you like you are suggesting to form a committee online, I don't think so you can even do so.

Regarding legal requirement to begun a startup, you need to understand whether you nature of business qualified to be called as startup. I request you frame your question correctly so we can answer or see a solicitor to resolve your queries.

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