Investments in startup and business: legal options for registration
We admit right away. In our opinion, quite often the term “startup” (startup) is misunderstood. The possible legal consequences associated with it are also erroneously determined. That is why, for the sake of convenience, we offer startups to mean any start-up business, start-ups to start-up businessmen, and investment is any property provided for doing business.
In this article, we will focus only on 3 options for registering investments provided to startups: an investment agreement, a loan agreement, and a simple partnership agreement.
By the way, we recall that our company cooperates with resources such as Rusbase, Zuckerberg will call, CMS Magazine, Digibu, Firrma.ru and others.
1. Investment contract
The main legal document governing the production and business and other relationships of the subjects of investment activity is the agreement (contract) between them (Article 7 of the Law of the RSFSR dated 26.06.1991 N 1488-1 “On investment activity in the RSFSR”). In addition to this, the Civil Code of the Russian Federation is applied and, if this is acceptable, the Federal Law of February 25, 1999 N 39-ФЗ “On investment activity in the Russian Federation carried out in the form of capital investments”.
Moreover, investments are any property, including rights, for the purpose of generating profit (income) and (or) obtaining another desired result.
Therefore, the investment agreement concluded between its parties should provide for the subject of the agreement, what exactly the startup should do with the investments provided (description of specific actions to profit / obtain the desired result). It is also characteristic that such a description will be accompanied by an indication of the purpose of the investment, an indication of the specific parameters (characteristics) that the startup should meet, a system for monitoring and reporting the startup to the investor, the final result, the onset of which is interesting to the investor and the timing of its appearance, providing the latter . We recommend you to pay attention that the usual conditions of other contracts are also inherent in this type of agreement, the inclusion of which may affect the security of the investor or startup. For example, the grounds for a unilateral change or termination of the contract; ensuring the fulfillment of obligations under the investment agreement (personal guarantee of the start-up, if he is not the party to the agreement; pledge, etc.).
2. Loan agreement
Under a loan agreement, one party (the lender) transfers ownership of money to the other party (borrower) or other things determined by generic characteristics, and the borrower agrees to return to the lender the same amount of money (loan amount) or an equal amount of other things received by him of the same kind and quality .If money is used as the property to be transferred, it is advisable to determine the period of their provision (return). And also pay attention to circumstances, the occurrence of which can help reduce this period or affect the change in the amount of interest on the use of the amount provided.
3. Simple partnership agreement
Under a simple partnership agreement (joint activity agreement), two or more persons (partners) undertake to join their deposits and act together without forming a legal entity to make a profit or achieve another purpose that does not contradict the law. Parties - only individual entrepreneurs and (or) commercial organizations. In this agreement, it is advisable to clearly define the contribution of each of the partners, how the common property is used and by whom, the procedure and methods for informing the partners about cases, the procedure for using the common property or determining / allocating a share of each of the partners, the procedure for reimbursing expenses for terminating the agreement.
A case in point is a misunderstanding of a simple partnership agreement made by its parties in a decision of the Arbitration Court of the Kemerovo Region dated 08.23.2012 in case No. A27-9851 / 2012. In the course of the consideration of this case, a conclusion was concluded between 4 individuals of a simple partnership agreement, two of which were only registered as individual entrepreneurs. Under this agreement, the participants combined their contributions to create a joint venture. Profit and expenses received as a result of entrepreneurial activity were divided into two parts in the proportion of 50% to 50%. Since the conclusion of the contract, the parties conducted a joint business, purchased the necessary equipment for its development. However, if one of the participants wanted to leave the common cause, disagreement arose over the return of property, its valuation, etc. The court recognized that "the disputed agreement, taking into account the purpose of the joint activity, does not meet the requirements of the law on the composition of the participants." Consequently, it does not produce the desired legal consequences. The plaintiff was denied the protection of his rights.
Bonus:
4. Also one of the options for investing is to increase the authorized capital of the company with the introduction of a new member of the company. Read our material in more detail.
p.s. The options outlined are not the only ones. These options can be combined with each other. Together they can be present in a specific situation of investing in a startup.
p.s.s. We recommend materials on similar topics:
a) Investments or how through lost profit to cover the risks of investing;
b) Commentary on the resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation dated 30.07.2013 No. 62 “On Certain Issues of Compensation of Losses by Persons Included in the Bodies of a Legal Entity”;
c) Commentary on the draft Resolution of the Plenum of the Supreme Arbitration Court of the Russian Federation “On Certain Issues Related to Disputing Major Transactions and Interested Party Transactions”;
d) Agreement on the exercise of the rights of members of the company;
e) Reorganization of corporate legislation;
f) Changes in corporate law: 15 innovations.
g) investment contracts and contracts.
The author of the article Vitaly Vetrov
p.s. We also offer our clients our legal services in the following areas:
1) business support;
2) protection of intellectual property;
3) litigation;
4) corporate practice;
5) real estate;
6) tax law.
We recommend reading our blog on legal and judicial cases (arbitration practice), and read the materials in the "Articles" section.
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