Legal Issues for startups

Company Ownership

…how big a risk are you willing to take, and what are

your ambitions…

Company Ownership

• Sole proprietorship

• Partnership

• Limited Liability Company

• Corporation

Sole proprietorship

• Personal risk – personally responsible

• No required startup capital

• Formality-free

• Easy and free to set up

• No audit requirement

• Most businesses start like this

Partnership

• Team of owners

• Personal and solidaric risk – all for one, one for all.

• Easy and – almost - free to set up.

• No capital requirements.

• Few regulations.

Limited Liability Company

• Limited risk. Your personal fortune is protected.

• Startup equity capital required.

• Costs: Attorney and Accountant

• More formalities – contracts, audit, public access to annual accounts.

• Easier to sell.

Corporation

• Limited risk. Your personal fortune is protected.

• Startup equity capital required.

• Costs: Attorney and Accountant

• More formalities – contracts, audit, public access to annual accounts, board required.

• Easier to sell – transferable shares.

Holding Structure

My Business Holding A/S

MyFirst Business A/S MyCompanyBuilding

ApS MyNewExperiment

ApS

Why holding structure?

• Tax issues

• Encapsulating risk and protecting assets

• Partnerships - ”partly partners”

• Preparing exit

• Preparing for next generation

Registration – in DK

…fill out 2 pages, send it in, and you have a business…

Registration – in DK

• Webreg.dk

• Download 2 pages registration form

• Wait for you CVR-number (1-2 weeks)

• Businesses with expectet turnover of more than DKK 50.000 per year must register for VAT (some exeptions for specific trades).

Authorisations

…in general you can just register and get going, but

there are exeptions…

Autohorisations

• Buildings – Municipalitys Technical Administration

• Waste, noise etc. – Municipalitys Environmental Control

• Food products – Local Food Inspection

• Serving alcohol – Chief of Police

• Etc.

Founders Agreement

[Partnership Agreement]

…discuss all potential conflicts while you can still do it on a

rational level…

Partnership Agreement

• Company purpose

• Name of partners

• Capital contribution

• Ownership - %

• Liability

• Division of profit/loss

• Work obligations

• Salary

• Illness, death etc.

• Management & Authority

• Decisionmaking

• Ownership transfer

• Confidentiality

• Non-compete agreement

• Books and records

• Conflict resolution

• Etc.

Employees

…the administrative job as an entrepreneur is easy until…

Employee Rights

• Employment Contract

• Insurance - permanent occupational injury

• Salaried Empolyees Act (typically non production workers)

• Holidays with Pay Act

• Dismissal – written and fair

• Employers Administrative Tasks

– Registration, social security, tax

Employment Law

• Working Environment Act

• Holidays With Pay Act

• Equal Treatment Act

• Child Care Leave Act

• Sickness Benefits Act