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Topical issues

You have an idea for a start-up tech business. You want to concentrate on developing that idea and growing the business but know there are some legal issues to take on board. How to strike a balance between keeping the legal fees down in the early days and getting the essential legal bits in place?

Sooner or later, companies may want investment, to be acquired or to go public. Legal issues come under the spotlight at that stage, and things which didn’t seem important in the early days can take on a big significance. Some of the main ones are dealt with below.

topical issues for tech commpanies

A company is a legal entity with a separate identity from those who own or run it. This note explains what is needed to form a new English private limited company and the main points of administration required after that to comply with legal requirements.

Getting the legal formalities right at the outset and getting into good habits of administration can prevent difficult questions arising later on, for example on a fund raising, bringing in new partners or realising value.

Our seed investment/Series A investment guide covers the funding options open to tech start ups. We firstly consider the types of funding that are available, the regulatory restrictions on raising funds and the sources of funding. We then go on to explain what seed investment and Series A investment means, explaining the key issues and terms relating to those investments.

 

Ownership of work product is absolutely crucial for most companies and intellectual property can form some of a company's most valuable assets. It is essential to ensure you own or have a licence to what you use, sell, distribute or licence. This means you need to be able to identify the intellectual property rights you have, make sure you really own them and understand how to protect and exploit them. In addition to this, you need to make sure that nothing you do infringes somebody else’s rights.

One of the key issues a potential investor or buyer will look at is whether a company owns the intellectual property rights used in the course of its business. Getting this right at the beginning will save you money and time in the long run but may be more complicated than you might suppose.

This note gives an introduction to intellectual property rights and how to protect them, and also covers data protection requirements (use of data which identifies individuals) with which all companies need to comply.

Using share options (equity incentivisation) for executives and employees can be a tax-efficient, inexpensive and effective method of achieving a company's strategic goals. The advantages of arrangements for directors or employees to be issued shares in the company, or granted options over shares in the company, can include aligning the interests of those individuals with those of the shareholders and investors and can also be a low-cost method of incentivisation.

Enterprise Management Incentive (EMI) Options are the most tax efficient method of granting share options to employees and executive directors and are ideal for many small companies (with fewer than 250 employees and £30m of gross assets group wide) wishing to use equity based interests to incentivise staff. Alternatively, unapproved options are tax-inefficient, but can be very flexible, simple to put in place and administer and can be used to grant options to non-exec directors and consultants, to find out more about unapproved options.

Becoming a director gives status and a direct impact on the strategy and success of a business.  How free is a director to act alone?  What obligations and duties should a director bear in mind?

This note summarises the general duties and potential liabilities of a director of an English private company (which is not in a group with a PLC).

Taking on employees is an important step in growing a business.  But what are the legal obligations on recruitment and during employment?  Does an employee need a written contract and what will their holiday entitlement be? Will work permits be required?  Will they be entitled to sick pay?  What happens if you want to let an employee go?

Knowing your rights as an employer and the rights of your employees is vital. This note is intended to provide a brief introduction to employment law issues which apply to employers setting up, or doing business, in England.

Tax has the potential to impact on all aspects of both setting-up and running your business. Considering tax issues from the outset can ensure that your business is established in the most tax efficient way for both you and your investors. It is also important to consider tax issues going forward to ensure that you are complying with all of the relevant tax law requirements and making the most of any available reliefs and other opportunities to maximise the tax efficiency of your business.

The notes provide a general introduction to some of the tax issues that may be relevant to your business and some of the changes in law that have been proposed recently, but there are many more! You should always take specific advice as tax law and tax rates change regularly.

When starting any business there are many matters that need to be dealt with. Most important is a good idea which can be turned into a product or service which can then be sold.

However, to develop a business, it is often necessary to raise finance and, if it is a technology business, it will be necessary to protect the ideas being developed and to incentivise employees.

This booklet summarises the legal issues that those starting a technology business must consider. It is intended for general guidance only and does not represent legal advice.