Finally, you have started that business you’ve always dreamt about. Feels good right? At this point, we know you would be trying to figure out how to get a structure for your business to make it profitable. Here’s an article to get you started.
– By DIYlaw
In this article, we will be highlighting a few documents every business should have, and why they need those documents. These documents are what Lawyers would say are sine qua non to your existence as a business, which is simply Lawyer talk for ‘essential, an absolute requirement, important, vital, crucial, etc’.
So here goes:
Business Registration Documents
Whether it is a business name, a limited liability company or a partnership, you need to have some form of entity through which you and others would participate in to run your business. This entity would possess enabling and creating documents, which are most likely documents you filed and received from the Corporate Affairs Commission (CAC).
The documentation for a business name includes:
- Certificate of Business Name Registration
Typically, a limited liability company’s documentation (which is the most popular) would include;
- Certificate of Incorporation
- Form CAC 1.1 (Application for Registration of Company)
- Memorandum and Articles of Association, commonly referred to as your MEMARTs.
- Founders or Shareholders Agreement
A Founders’ or Shareholders Agreement goes further than a MEMART to govern the relationship among the shareholders, and between the shareholders and the company itself.
A standard shareholders agreement would have clauses relating to the disposal or transfer of shares such as pre-emptive rights, rights of first refusal, redemption of shares upon death or disability,issues requiring shareholder approval, assignment of IP and invention rights to the company, appointment of directors, etc.
If Founders’ Agreement, it will also include provisions on responsibilities of the founders, vesting, decision making etc.
- Non-Disclosure Agreement (NDA)
An NDA is a contract entered into to protect the confidentiality of information shared between parties (business partners, colleagues, employees, service providers, consultants, investors etc.). It restricts third party access to the information shared and is enforceable in court when breached. An NDA could be mutual (for circumstances when information is to be exchanged by both parties) or one-sided when only one party is to disclose information.
- Employment Agreements or Offer Letters
This is the letter with which the business employs employees, or the offer contract with which it engages other “workers” who may not necessarily be employees, e.g. consultants, interns, contract staff etc.
These letters must be carefully worded to ensure that the statutory rights and benefits applicable to each class of workers are covered. You also want to be careful not to term a person who is actually an employee; a contract staff and vice- versa due to the statutorily required pension contribution scheme by an employer on behalf of its employees.
- Intellectual Property (IP) & Invention Assignment Agreement
This is an agreement through which an individual assigns rights in an intellectual property to another. The means of doing this is through an IP Assignment Agreement. It should be one of the first documents entered into by founders once they incorporate an entity or for others you engage to work with your business.
Whilst the IP Assignment Agreement usually addresses the assignment of pre-incorporation IP rights to the company, an Invention Assignment Agreement assigns the rights that may arise during the lifetime of the business, it is usually drafted in a “futuristic” manner such that it assigns to the company, rights that may arise whilst executing tasks in the ordinary course of business.
- Terms of Service
You know that long epistle you typically skip reading and just check the “I Accept” box? You also should have one, especially if you run a business where you collect information from people, which around these parts is often the case as there is almost always an e-commerce or registration angle to most internet/tech start-ups.
Copying without customising your Terms of Service to comply with Nigerian laws and regulations renders many of the clauses unenforceable and untenable in a Nigerian court against a user.
- Vendor’s Agreement
Having a vendor agreement in place with vendors and service providers is important because it helps set the expectations between the parties when it comes to, among other things, the type and quality of services provided, duration of services,cost and payment terms, liability considerations and dispute resolution terms if things don’t go as planned.
This list is by no means exhaustive. There are several other documents a business should have, some of which may be peculiar to your business or industry. However the documents listed above are a must-have to get your bases covered.
Need legal advice? Send in your questions.
DIYlaw is a platform that empowers African entrepreneurs by creating access to simplified legal services and information. All of which is done transparently and at affordable prices.
Editor’s note: This article was originally published in the Spark Magazine. Find the magazine here to read more article.