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Business Legal-Health Check

Starting and running a business is hectic, and owners usually prefer executing and selling instead of covering legal issues that are every bit as important. I’ve developed a “Business Legal Health Checklist” for owners to have a better idea of where they are at from a legal perspective and what they should be focusing on. It’s not legal counsel, it’s not comprehensive, and not every business needs the same amount of details as is covered here. Therefore, I urge you to find a business lawyer as a second step to tailor an action plan to your specific situation. The health check can cover, among other topics:

  • Governance
  • Capitalization
  • Intellectual Property
  • Employment
  • Data Protection
  • Contracts
  • Standard Terms and Conditions

Corporate Entity

  • Verify that it is in line with business purposes
  • Make sure that it is duly authorized in the state where it is doing business

Equity Structure

  • Verify existence and quality of stock option agreements
  • Have a proper Stock Plan in place
  • Verify existence of Cap. Table

Bylaws

  • Include Directors and Officers Indemnification Agreement
  • Verify that applicable Shareholders Agreements are present
  • Cover Board Management Process

Intellectual Property

  • Confirm that IP matters (trademarks, design rights, software, etc) and commercial rights are properly owned, licensed and protected

Employment

  • Verify that key personnel are bound by employment contracts with appropriate notice periods and non-competes
  • Make sure that all employees and independent contractors signed Confidential Information and Inventions Assignments Agreements
  • Corroborate that the company has an updated Employees Manual

Data Protection

  • Confirm that data protection regulations, policies and marketing strategies are all properly aligned
  • Verify that policies compliant with applicable laws such as GDPR, etc.
  • Make sure that all terms and conditions and standard form documents reflect what the business does and are fit for purpose

Others

  • Look for clauses in agreements with former and present employers that may prevent or hinder the new corporation’s business purposes
  • Ensure that the Board has approved relevant documents
  • Review Contract Management and Review Process

Disclaimer: This information is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Iván Ríos Mena or any affiliated entity or present or future employer, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this information should act or refrain from acting on the basis of any information included in, or accessible through, this material without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.

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