Sometimes overlooked, the legal aspects are nevertheless essential when you set up your business. Have you thought about protecting yourself in the event of a buyout? Have you defined a partnership agreement? Or have you registered your trademark? We take stock with Anne-Marie Pecoraro and Corinne Khayat, associate lawyers specialized in intellectual property at UGGC Law Firm.
Why is it important to anticipate legal issues?
« Quite simply because it is not possible to build a solid house without good foundations! It is important to understand that legal support should not be seen as a cost, but as an investment,” says Corinne Khayat. “It is essential to demonstrate that everything is in order and structured from the very beginning of the company’s creation so that the players with whom you are going to contract can have confidence. Some entrepreneurs prefer, for cost reasons, to deal with these legal aspects at a later stage, but sometimes it is unfortunately too late. If, for example, you want to bring in investors, they will inevitably carry out an audit of your company to ensure that everything is in order, » adds Anne-Marie Pecoraro.
The lawyer, a strategic advisor
Chartered accountant, tax specialist, lawyer: you need to build relationships of trust with these three key players for your future business. For our interlocutors, the lawyer must be more than just a lawyer, but rather an advisor, a partner, able to guide you in the different strategic aspects of your company. “The lawyer is there to support you upstream, and not only to mop up any problems,” say our respondents. In addition, there are special rates for startuppers.
And now, let’s get to the heart of the matter!
1. Choosing your legal framework
If you are setting up a startup, you must immediately choose a legal framework to create your company. Currently, the SAS and, to a lesser extent, the SARL are the most popular forms. “The advantage of companies is that they allow you to put a screen between your personal assets and those of the company,” says Corinne Khayat. You will choose the type of structure according to your field of activity. Note that if you are married and separated, your personal assets are automatically protected. If this is not the case, mention it to your lawyer. You can also inform your tax advisor. Namely: research-oriented companies currently benefit from good tax credits. Another point to see with the tax specialist.
2. Drawing up a partnership agreement
Chances are you will start your business with an e-partner, or consider it for the future. “At the beginning, everything is rosy, but it is essential to define the rules of the game and to anticipate the solutions to be considered in case of disagreements, in order to avoid any difficulties that could go as far as the liquidation of the company,” says Anne-Marie Pecoraro. To do this, there is a tool: the partnership pact! It allows to organize, in parallel to the statutes and in a more confidential way, the relations between partners. For example: who is the manager of the company? What are his powers and up to what expenditure ceiling can he act alone? Can he give up the technology? “Even if you’re alone, it’s really important to think about all of these things as soon as possible,” the lawyers say. The question of new equity investment by new partners also needs to be addressed, with “safeguards” such as an approval or pre-emption clause. The consequences of a transfer of shares may also be considered. Thus, “if one of the two sells his shares, a total or proportional joint exit right may be provided for, allowing the other partners to buy back their shares”, continue our interlocutors. Another point concerning the distribution of capital: if, for example, it is 50/50 and decisions are taken by majority, there may be blocking points. “It is necessary to anticipate the organization of the shareholding and the majority rules as well as, if necessary, the solutions allowing to unblock these situations”, they continue.
3. Have a confidentiality agreement
In the beginning, you had an idea. Unfortunately, many ideas that are not formalized and have no originality cannot be protected. This is why lawyers recommend that you always draft a confidentiality agreement, which will prohibit your partner from disclosing confidential information exchanged concerning your project in particular.
4. Determining the corporate purpose of the company
When you are going to set up your business, you will get a KBIS and an APE code. Depending on this code, you will have the right to establish or not establish certain contracts (for example intermittent contracts), but also to benefit from certain aids, or to have to apply this or that collective agreement. “So think well ahead of time.
administrative classification of your company through its corporate purpose so that it covers all areas of your business,” explain the lawyers.
5. Adopt a filing strategy
Signs, names, domain name… all this allows you to build the capital of your company’s intangible assets. You may already have some very good ideas to identify your business, but perhaps these are already being taken up by other companies. Also, don’t register several names unnecessarily, because there are also obligations attached to trademark registration. “The registration strategy is fundamental. You should already know your objectives at 5 years, because the trademark as registered must be exploited within this period to avoid a lapse. This can have a terrible cost in terms of image, but also financially,” says Anne-Marie Pecoraro. It’s the same thing for a domain name or product names. The INPI can provide you with reports, and your lawyer is there to look for anteriorities linked to these names. “If another company has the same name, the lawyer will be able to tell you what percentage of risk you are taking if you decide to keep it. If another company has the same name, the lawyer can tell you what percentage of risk you’re taking if you decide to keep the name,” she says. By putting you in order legally, you will once again reassure potential investors who will audit these legal aspects. They will check whether you have registered your brand, whether these brands are protected and monitored, whether their exploitation can be demonstrated by well-kept exploitation files, and whether domain names are properly owned and controlled.
6. Thinking about Intangible Assets
While not all intangible assets can be protected by copyright, there are several things that can be done to strategically protect your assets. For example, in France, copyright registration is not required, but it is useful to ensure a certain date on which a creation can be claimed, and this can also constitute a presumption that you have a claim to the creation. There are also terms and conditions for each sector. For example, it is possible to file software with the Program Protection Agency. “It’s not mandatory, but it allows you to have a date. You can also drop off a sun envelope or a fold at a notary or bailiff to date an idea or a concept,” the lawyers explain.
7. Check that you have the rights to what you are exploiting.
A music in a theme song, a photo from an image bank… it is very important that you are sure you can use the material you use to communicate. “If you hire a photographer, or a freelancer for a slogan, establish a confirmation of assignment contract to ensure that you will be able to use his or her work. It’s also important to think about this in employment contracts, even for interns,” advise specialists.
8. Think about general terms and conditions and the DPSP
In your checklist, don’t forget the general terms and conditions of your company (use, sale, cancellation etc…). If you do e-commerce, it is extremely important to keep up to date with changes in this sector. Finally, you will not be able to avoid thinking about your RGPD policy. “For example, if the company has or uses a customer database that does not comply with the DPM policy, it will be worth nothing but trouble. So it’s useful to be trained, to be accompanied, to have the right privacy notices, and to be equipped for cyber security,” conclude the lawyers.
Paulina Jonquères d’Oriola
