Possible Legal issues faced by Startups in Singapore
Possible Legal issues faced by Startups in Singapore – When it comes to setting up a business, you need to know that the legal structure is one of the most important things that you need to take note of. Singapore thrives as a business hub not just because it has a strong financial system but also because it has a strong rule of law in place so that businesses can thrive and do well in this environment.
Contracts in Singapore are highly binding and when it comes to getting into legal trouble with anyone in Singapore, you can be assured that the laws of Singapore will protect you the same way they protect the other party. There will be no such thing as power play in Singapore and this is what makes Singapore one of the best places to trade and get things done and get contracts signed.
Startups are usually run by young or inexperienced persons who have an idea and want to bring it to market. But at the same time are not aware of the possible pitfalls that can come about when they want to get something done up for investors or for getting it out in the market as fast as possible.
So what are some of the topics and items that we will like to give advise on when you are getting into contracts and also what to watch out for when you run a startup:
- Check what you sign, no matter who the other party is
The worse kind of issues that you can face is when your other party is a close friend or someone that you have known for a long time and end up making you sign something that leaves you with the shorter end of the stick. When it comes to money and power, people can do all kinds of things. This could also mean getting you into a contract that puts you in the disadvantage.
You need to be clear that when it comes to getting contracts done up and signed in Singapore, it holds both of you strongly into this contract and there is no way to say that you signed it under trust that your benefits are protected. Always be clear about what you signed and in this manner you will not get involved in a skewed contract.
Its not tough to read through what you sign and making sure the terms are fair and negotiate with the other party if it is not.
Always remember the saying that goes by, “Better to be safe than to be sorry”
2. Get lawyers or legally trainer persons to draft shareholder contracts
Drafting a contract that is able to cover most of the legal issues involved is not easy. You should always get someone who is legally trained to help you out with such requirements because there are definitely items that most of your shareholders may not have taken note of. There are also clauses which may not stand in the eyes of the law and therefore should be changed.
There is always a reason to get such contracts done up and it can be quite cheap to get this done if you are trying to just get a review of the contract that you have prepared. Most people fear that the contract reviewing will require lots of money and this is not the case.
Shareholder contracts are the most sensitive of contracts and therefore should be treated with the utmost importance when it comes to getting them done up properly and checked by legally trained persons.
KCA is a proud partner of a few law firms and contract drafting organizations, if you require said help, do contact us for a quick contact point with our partners to get your contracts done up!
3. Make sure you get trained persons to help you with Corporate Secretarial work
Most businesses in Singapore do not like to get someone to act as their corporate secretary. There is a common practice that many startups will just put one of their co-founders or their friends to just “act” as their corporate secretary in ACRA documents without realize the importance of such a professional.
Corporate secretaries are key to ensuring the governance of the company is done right and for someone to be able to act as a professional one, there needs to be many years of experience acting as one for other companies or they are trained and gone through many years of studying to get their charter.
Corporate secretaries will ensure that you share transfers are done right and with the proper documents signed and filed up. Appointing of directors are done with proper meetings and also with the necessary paperwork signed by all the relevant stakeholders.
Deadlines such as those of the Annual General Meetings and Annual return will also be abide by properly when you get someone who knows what they are doing to act in this important role.
Corporate secretarial services in Singapore can be affordably packages with accounting services in Singapore if you really do need them, contact KCA to find out more about this.
4. Know how your paid up capital affects your accounts
Most people who have no idea what shares are will confuse that it is just a number that they can declare high to look good. Paid up capitals are important to the bank, the supplier, the landlord and any one who is willing to do business with you. They will be keen to trade with a company that has a decently high paid up because that means this business has the financial capabilities to pay up when there is a need to. This also shows that shareholders have the confidence in the business to sink in so much money.
There are situations where investors may cause issues if you do have a paid up capital in the system that is not really paid up in the accounts and this will mean that you are still owing money to the company which is a bad thing considering that you may not have that amount to be placed in the company in the first place.
You won’t want a good progress in your business be delayed because you are not aware of what is your paid up capital and how it can affect you and this is something that will be around for quite awhile, so make sure you know what you are doing with your paid up capital before you start working on it.
K Cloud Accounting is a leading Xero Accounting Singapore Specialist that is keen to work closely with startups to provide startup accounting services at a competitive rate.
Call us to find out more 98638665.
Possible Legal issues faced by Startups in Singapore