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This page explains legal advisory for startups and businesses in plain terms: the law, the forum, the documents and the usual steps. Legals365 is the legal platform of Advocate B.K. Singh and associates, based in Delhi NCR.

In short. Legal advisory for startups and businesses means having a lawyer set up the right entity, draft founder, investor, customer and employment contracts, protect the brand and code, keep ROC, tax and labour compliance on track, check property deals, and step in early when a dispute starts. It costs far less than fixing a badly drafted agreement or a missed filing later.

Most businesses in India do not need a lawyer every day. They need one at a handful of points that decide how much trouble they will have later: when choosing a structure, when founders split equity, when the first investor arrives, when the first employee joins, when an office or warehouse is leased, when a large customer sends a forty page contract, and when a payment stops coming. Legal advisory is the work done at those points, plus a routine check that filings and registrations are not slipping.

This page explains what that advice covers for a new startup, a family business, a trading firm or an established company, which laws apply, what documents you should have in your files, how the answer changes for a sole founder, a partnership or a company with foreign investors, and what usually goes wrong when advice is skipped. It applies across India, with notes on how things work in Delhi, Noida, Ghaziabad and Gurugram where the local rule matters.

Law

Companies Act 2013, LLP Act 2008, Partnership Act 1932, Indian Contract Act 1872, FEMA 1999, Income-tax Act 2025 (in force from 1 April 2026), CGST Act 2017, the four Labour Codes, DPDP Act 2023, Trade Marks Act 1999, Copyright Act 1957, MSMED Act 2006

Authority

Registrar of Companies and the MCA portal, DPIIT for startup recognition, GST and income tax departments, RBI through the authorised dealer bank for foreign investment, Trade Marks Registry, state labour departments

Time limit

Commencement of business declaration within 180 days of incorporation; first auditor within 30 days; charges registered within 30 days; FC-GPR within 30 days of allotting shares to a foreign investor; annual ROC filings after the AGM

Documents

Incorporation certificate, MOA and AOA or LLP agreement, shareholders or founders agreement, board resolutions, statutory registers, employment and IP assignment agreements, key customer and vendor contracts, lease deeds, registrations and licences

What legal advisory for a business actually covers

Legal advisory for a startup or business is preventive work: making decisions and signing documents in a way that will hold up if something goes wrong. It covers the choice of entity, the founders' arrangement, investment documents, employment terms, intellectual property, commercial contracts, data and privacy, tax and regulatory registrations, property transactions and the annual compliance calendar. When a dispute does arise, the same adviser should know the documents well enough to say quickly whether to negotiate, send a notice, invoke arbitration or file a case.

In practice the work comes in two forms. Some businesses take advice transaction by transaction, for example a shareholders' agreement now and a lease review in six months. Others keep a lawyer on a retainer who reviews contracts as they come in, attends to notices and keeps an eye on deadlines. A retainer suits businesses that sign agreements every week or deal with regulators often. A small trading firm may need only a periodic check.

Good advice is specific. A note that says a clause is "risky" is not much use. A note that says the indemnity is uncapped, the governing law is Singapore, the payment term is 120 days and the termination right runs only one way, and suggests replacement wording for each, is what you are paying for.

Choosing the right business structure

The structure decides who is liable for debts, how easily you can bring in partners or investors, what compliance you carry and how profits are taxed. A sole proprietorship is not a separate legal person; the owner is the business and is personally liable for everything. A partnership firm under the Partnership Act 1932 is similar, with each partner liable for the firm's debts, and an unregistered firm cannot sue third parties to enforce a contract (section 69), which surprises many family businesses when a customer defaults.

A limited liability partnership under the LLP Act 2008 gives limited liability with lighter compliance than a company, and suits professional practices and service businesses that do not plan to raise equity. A private limited company under the Companies Act 2013 needs at least two directors and two shareholders, and is the structure investors expect, because shares can be issued, transferred and given as ESOPs. A one person company allows a single founder to have a company, with conversion rules once it grows.

If you expect outside equity within two or three years, start as a private limited company. Converting a proprietorship or LLP later is possible, but it involves transfer of assets, contracts, licences and sometimes stamp duty, and investors will want the history cleaned up before they put money in.

Business structures compared

Incorporation and the first ninety days

A private company is incorporated online through the SPICe+ forms on the MCA portal, which also issue PAN and TAN and can open the GST, EPFO and ESIC registrations. The name must clear the Registrar's naming rules and should not conflict with an existing trade mark. Run a trade mark search before you print the name on anything; a company name approved by the ROC is not a trade mark and gives no protection against a prior brand owner.

After incorporation a few deadlines run quickly. The board must appoint the first auditor within 30 days. The declaration of commencement of business (Form INC-20A) must be filed within 180 days, after the subscribers have paid for their shares; a company that misses it faces penalties and can be struck off. The first board meeting should be held within 30 days, statutory registers opened and share certificates issued to the subscribers.

This is also the time to open a separate bank account in the company's name and stop paying business expenses from personal accounts. Mixed accounts create tax trouble and make the founders' own money look like unexplained loans to the company. When Advocate B.K. Singh reviews the records of a young company before its first investment round, the gaps he finds most often are missing board minutes, unpaid subscription money and share certificates that were never issued.

Founders' agreement and shareholders' agreement

Every company with more than one founder needs a written agreement on equity, roles, vesting and exit, signed early while everyone is still friendly. The articles of association handle the statutory basics, but they rarely deal with what happens if a founder stops working, wants to sell, sets up a competing business or dies. A founders' agreement, later replaced by a shareholders' agreement when investors come in, fills that gap.

The clauses that matter most are vesting of founder shares (typically over three or four years with a cliff), the right of the company or other founders to buy back unvested shares, transfer restrictions such as right of first refusal and tag along and drag along rights, decision-making on reserved matters, deadlock resolution, non-solicitation and confidentiality, and a dispute clause. Key rights must also be written into the articles, because a restriction found only in a private agreement may not bind the company.

In a family business the equivalent is a family or partners' arrangement covering who owns the property used by the business, who can sign cheques, how profits are drawn and how a member exits. Many partition and recovery suits that reach court began because none of this was written down.

Raising money: equity, convertibles and foreign investors

Investment in an Indian private company usually comes as equity shares or compulsorily convertible preference shares, issued on a private placement or preferential allotment under sections 42 and 62 of the Companies Act 2013, with a valuation report and a special resolution where required. Convertible notes are permitted for DPIIT recognised startups subject to the conditions in the deposit rules, and SAFE-style instruments used abroad have to be restructured to fit Indian law. The term sheet is negotiable; the definitive documents are where the investor's protections are fixed, so read the liquidation preference, anti-dilution, information rights and founder warranty clauses with care.

Money from a foreign investor brings FEMA into play. Most sectors are open under the automatic route, but pricing must meet the guidelines, shares must be allotted within 60 days of receiving the funds, and the allotment must be reported in Form FC-GPR on the RBI's FIRMS portal within 30 days, through the company's authorised dealer bank. Late reporting is common and leads to compounding proceedings. Investment from a country sharing a land border with India needs government approval.

The old angel tax on share premium received by closely held companies was abolished from the 2025-26 assessment year, which removed a long-standing worry for startups. Valuation still matters for FEMA, for the Companies Act and for the investor's own tax position, so do not skip the valuation report.

Employees, ESOPs and the Labour Codes

Every employee and consultant should sign a written agreement that covers pay, duties, confidentiality, assignment of intellectual property and the notice period. The four Labour Codes came into force on 21 November 2025 and changed definitions of wages, the rules on fixed-term employment and gratuity, and registration and return filing; several states are still notifying their rules, so check the rules for the state where each office sits. Once ten or more people work at a workplace, the POSH Act requires an Internal Committee and a written policy.

Post-employment non-compete clauses are generally void in India under section 27 of the Indian Contract Act 1872, so do not rely on one to stop a departing engineer from joining a competitor. What you can enforce is confidentiality, non-solicitation of clients and staff for a reasonable period, and the return of company material. Restrictions that operate while the person is still employed are treated differently.

ESOPs need a scheme approved by special resolution, a vesting period of at least one year and proper grant letters. Promoters and directors holding more than ten percent cannot normally get ESOPs, but DPIIT recognised startups have a relaxation for a period after incorporation. Tax on exercise and sale is a separate question that employees should understand before they accept a grant.

Commercial contracts your business signs

Most business disputes come from contracts that were signed without being read: customer agreements, vendor terms, distribution and franchise agreements, software and SaaS terms, NDAs, purchase orders with standard terms on the back. A contract review should identify the scope of work, payment terms and interest on delay, limitation of liability, indemnities, termination rights, intellectual property ownership, governing law and the dispute clause. Our page on drafting and reviewing commercial contracts goes into these clauses in detail.

Stamp duty is often forgotten. Agreements executed in India are chargeable under the Indian Stamp Act 1899 as applied in each state, and an insufficiently stamped agreement cannot be relied on in evidence until the duty and penalty are paid. Delhi uses e-stamp paper; UP and Haryana have their own rates for many instruments. The Supreme Court held in 2023 that lack of stamping does not make an arbitration clause void, but you will still pay the deficit and penalty later, usually at the worst moment.

Electronic signatures are valid under the IT Act 2000 for most commercial contracts, but not for a power of attorney, a will, a trust deed or a contract for sale or conveyance of immovable property. For those, sign on paper and register where the law requires it.

Protecting the brand, the code and the content

The business name, logo, software, designs and content are often a startup's most valuable assets, and the most common legal gap is that the company does not actually own them. Under the Copyright Act 1957 an employer owns work made by an employee in the course of employment, but a freelancer, agency or co-founder who wrote the code before joining owns it until it is assigned in writing. Investors check for signed assignment deeds in due diligence.

File a trade mark application for the brand in the classes you actually use, early and before launch, and search the register first. A registration lasts ten years and is renewable; examination objections must be answered within the time given, and third parties can oppose after the mark is advertised. See our page on trademark registration, objections and infringement for the process. Domain names, social media handles and app store listings should be registered in the company's name, not in a founder's personal account.

Where you license technology in or out, the licence should say who owns improvements, what happens on termination and whether source code is held in escrow. Open source components need a licence check if you plan to sell the product to enterprise customers.

Data protection, online business and consumer rules

Any business that collects personal data from customers or employees needs to plan for the Digital Personal Data Protection Act 2023. The DPDP Rules were notified in November 2025 with a phased start, so obligations such as notice, consent, security safeguards, breach reporting and grievance handling come in over a period; build them into your product now rather than retrofit them later. The IT Act 2000 and the IT Rules continue to apply to intermediaries and platforms, including the February 2026 amendments on faster takedown of certain content. Our page on DPDP Act and data protection compliance covers the steps.

E-commerce businesses also deal with the Consumer Protection Act 2019 and the E-Commerce Rules, which require disclosure of seller details, return and refund policies and grievance officers, and prohibit certain practices. Misleading advertisements and dark patterns attract the attention of the Central Consumer Protection Authority. A privacy policy and terms of use copied from another website are a liability, not a protection, because they will describe practices your business does not follow.

Tax, GST and other registrations

A business needs PAN, TAN, GST registration once it crosses the threshold or makes supplies that require registration regardless of turnover (such as most inter-state supplies of goods and supplies through e-commerce operators), and the local licences for its activity. Thresholds differ by state and by whether you supply goods or services, so check the current limits for your state. Our page on GST registration, returns and notices explains the process and the common notices.

The Income-tax Act 2025 replaced the 1961 Act from 1 April 2026, so section numbers in older advice and in many online articles are now out of date. The startup tax holiday for eligible DPIIT recognised startups continues for those incorporated before 1 April 2030, subject to certification by the inter-ministerial board. DPIIT recognition itself is available to private companies, LLPs and registered partnership firms up to ten years old whose turnover has stayed within the prescribed limit and which are working on innovation or a scalable model.

Udyam registration under the MSMED Act 2006 is free and gives a micro or small enterprise the right to be paid within 45 days and to approach the MSME Facilitation Council for delayed payments. If you sell to large companies, register; the statutory interest and the Council route make recovery of dues much easier. See MSME delayed payment claims.

Corporate property transactions

When a business leases, buys or mortgages property, the same title and registration rules apply as for any individual, plus corporate approvals. A lease of more than a year must be registered under section 17 of the Registration Act 1908, and an unregistered lease cannot be relied on to prove its terms (section 49). Many offices and shops are taken on leave and licence agreements instead, which suit short periods but give the occupier fewer rights. Check that the lessor actually owns the premises, that the use is permitted under the master plan or the lease from DDA, Noida, Greater Noida or GDA, and that there is an occupancy certificate.

For a purchase, run a full property due diligence: title chain, encumbrances, mutation, dues, approvals and pending litigation. The company must pass a board resolution authorising the purchase and naming the signatory, and a sale or lease of the whole or substantially the whole of an undertaking needs a special resolution under section 180. When the company borrows against property, the charge must be registered with the ROC within 30 days of creation under section 77, with only a short extension on additional fees; an unregistered charge does not bind a liquidator or other creditors.

Industrial plots in UP and Haryana are usually leasehold from the development authority, and transfer, change of use or a change in the shareholding of the lessee company can need the authority's permission and a fee. Check the lease deed before you sign a share purchase that changes control.

Annual compliance and what happens if you miss it

A private company must hold board meetings (at least four a year, with relaxations for small companies and one person companies), hold its annual general meeting within six months of the end of the financial year, get its accounts audited and file its financial statements (Form AOC-4) and annual return (Form MGT-7) with the ROC after the AGM. Directors must keep their KYC current. An LLP files its annual return (Form 11) and statement of accounts and solvency (Form 8) each year. Our page on company and LLP compliance sets out the calendar.

The penalties are per day and add up, but the bigger risks are structural. A company that does not file its financial statements or annual returns for three continuous years exposes its directors to disqualification under section 164(2), which stops them serving on any company board. A company that has not done business for two years can be struck off under section 248, and restoring it means a petition to the NCLT. Founders who set up a company, lose interest and stop filing often find out years later when a new venture's incorporation is rejected because they are disqualified.

How to set up your business legally, step by step

This is the order in which we usually work through a new business, whatever its size.

1. Decide the structure

   Compare a proprietorship, partnership, LLP and private company against your plans for investment, liability and compliance. Write down who will own what before anything is filed.

2. Clear the name and brand

   Search the trade mark register and the MCA name database together. File the trade mark application for the brand at the same time as incorporation, not after launch.

3. Incorporate and finish the first filings

   File SPICe+ or the LLP incorporation forms, open the bank account, appoint the auditor within 30 days, collect subscription money and file the commencement declaration within 180 days. Issue share certificates and open the registers.

4. Sign the founders' and employment documents

   Execute the founders' or shareholders' agreement, IP assignment deeds from founders and freelancers, and employment agreements with confidentiality and assignment clauses. Align the articles with the agreement.

5. Set up contracts and policies

   Prepare standard customer terms, vendor terms, an NDA, a privacy policy that matches what you actually do, and a POSH policy once you approach ten people. Stamp agreements correctly.

6. Register for tax and sector licences

   Obtain GST registration where required, Udyam registration, labour registrations under the applicable Code and any sector licence such as FSSAI, a trade licence or a fire NOC. Apply for DPIIT recognition if eligible.

7. Put the compliance calendar in place

   List every annual and event-based filing with its deadline and the person responsible. Review it every quarter with your accountant and lawyer.

A business that has already started trading can still follow these steps; the work then is to fix what is missing, in roughly the same order, before an investor, buyer or bank asks for it.

Documents every business should keep ready

When advice turns into a dispute

The first legal step in most business disputes is a well-drafted notice, not a lawsuit. A notice that sets out the contract, the breach, the amount and a clear deadline often resolves payment disputes, and it fixes your position if the matter goes further. Commercial disputes of three lakh rupees and above go to the commercial courts under the Commercial Courts Act 2015, which requires pre-institution mediation under section 12A unless you need urgent interim relief.

If the contract has an arbitration clause, the dispute goes to an arbitrator, and interim protection can be sought from the court under section 9 of the Arbitration and Conciliation Act 1996 even before the arbitration starts. Our page on arbitration, interim relief and award challenges explains the route. A micro or small supplier can use the MSME Facilitation Council instead. A dishonoured cheque gives a separate criminal remedy under section 138 of the Negotiable Instruments Act with strict deadlines. Disputes among shareholders of a company, such as exclusion from management or dilution, go to the NCLT as oppression and mismanagement petitions.

In disputes between business partners that reach Advocate B.K. Singh's office, the weak point is usually the paper trail: a verbal arrangement about profit sharing, payments made in cash, or a shareholding that was never recorded. The earlier you fix the documents, the less any later dispute costs.

Mistakes businesses make most often

• Choosing the cheapest structure without thinking ahead. A proprietorship or partnership is quick to start, but converting it when an investor or a big customer asks for a company takes time and money.
• Signing customer contracts unread. Uncapped indemnities, one-sided termination rights and foreign jurisdiction clauses are common in large customers' standard terms, and most are negotiable if raised before signing.
• Not owning the IP. Code, designs and content made by freelancers, agencies or founders before incorporation stay with them unless assigned in writing.
• Mixing personal and business money. It causes tax problems, confuses the accounts and can lead creditors to argue that the company is a mere front for the owner.
• Letting filings lapse. Three years of missed annual filings can disqualify every director, and the effect follows them to other companies.
• Using a template privacy policy or employment contract. A document that does not match how the business works gives no protection and can be used against you.

How the advice differs by business type and location

A technology startup's priorities are equity, IP, ESOPs, investment documents and data protection. A manufacturing unit's are land and lease, factory and pollution consents, labour compliance, supply contracts and recovery of dues. A trading business worries most about GST, credit terms and cheque bounce cases. A professional practice usually needs a sound LLP or partnership agreement and engagement terms. A family business needs clarity on who owns the property and how the next generation comes in.

Location matters for registrations and courts. A company's ROC is decided by the state of its registered office, so a company registered in Delhi deals with the ROC for Delhi, one in Noida with the ROC for Uttar Pradesh, and one in Navi Mumbai or Aurangabad with the ROC for Maharashtra. Stamp duty, shops and establishments registration, labour rules and the rules of local development authorities all depend on the state. Disputes go to the courts with jurisdiction under the contract and the law, and in Delhi commercial suits above two crore rupees go to the Delhi High Court, with district commercial courts below that. Our page on company, LLP and business registration covers the state-wise steps.

What to do this week

Pull together your incorporation papers, any founders' or shareholders' agreement, your three largest customer and vendor contracts, your lease and the list of filings made in the last year. Check whether every founder, employee and agency that created something for the business has signed an assignment. Check the MCA portal for the company's filing status and each director's KYC status.

Then make a short list of what is missing, in order of risk: anything that could stop an investment or sale, anything that exposes you to unlimited liability, and anything with a statutory deadline. If you want the papers checked before you act, the team of Advocate B.K. Singh at Legals365 can review them and tell you the next step; you can talk to a lawyer here.

Frequently asked questions

Do I need a lawyer to start a business in India?

The law does not require one, and many people incorporate through an accountant or online. A lawyer is most useful for the documents that decide disputes later: the founders' agreement, investment documents, employment and IP assignment agreements and key contracts. Getting these right at the start costs far less than fixing them in a dispute.

Should my startup be an LLP or a private limited company?

If you plan to raise equity from investors or give ESOPs, choose a private limited company, because investors expect shares and LLPs cannot issue them. An LLP suits professional and service businesses that will be funded by the partners and want lighter compliance. Converting later is possible but adds cost and paperwork.

What is a shareholders' agreement and why does it matter?

It is a contract among the shareholders and the company setting out board rights, transfer restrictions, vesting, reserved matters, exit rights and dispute resolution. It matters because the Companies Act and standard articles do not deal with founders leaving, deadlock or investor protections. Key terms should also be written into the articles so that they bind the company.

Is a non-compete clause enforceable against a former employee in India?

A non-compete that applies after employment ends is generally void under section 27 of the Indian Contract Act 1872. Courts do enforce confidentiality obligations, reasonable non-solicitation clauses and restrictions that apply during employment. Draft your agreements around those instead.

Who owns the code written by a freelancer for my company?

The freelancer does, unless there is a written assignment under the Copyright Act 1957. Work made by employees in the course of employment belongs to the employer, but consultants, agencies and founders working before incorporation are not employees. Get signed assignment deeds before an investor's due diligence finds the gap.

What filings does a private limited company have to make every year?

At minimum, audited financial statements in Form AOC-4 and the annual return in Form MGT-7 after the AGM, director KYC, and the board and general meetings required by the Act. There are also event-based filings such as changes in directors, share allotments, charges and changes of registered office. Income tax, GST and labour filings run on their own calendars.

What happens if my company stops filing returns?

Penalties accumulate daily, the company can be struck off by the ROC under section 248, and after three continuous years of default every director can be disqualified under section 164(2). Disqualification stops the person from being a director in any company for five years. Restoring a struck off company requires a petition to the NCLT.

How do I bring in a foreign investor into my Indian company?

Check that the sector is under the automatic route and that the investor is not from a country sharing a land border with India, which needs government approval. Issue shares at a price that meets the pricing rules, allot within 60 days of receiving funds and report in Form FC-GPR within 30 days through your bank. Late reporting leads to compounding proceedings.

Is DPIIT startup recognition worth getting?

For an eligible company or LLP it usually is. It opens the startup tax holiday, relaxations on ESOPs for promoters, convertible notes, self-certified compliance under certain laws and easier public procurement. Recognition is free and applied for online, but the tax holiday needs separate certification.

Does my business need to register a lease of office space?

A lease for more than one year, or one reserving yearly rent, must be registered under section 17 of the Registration Act 1908, and an unregistered lease cannot be used to prove its terms. Leave and licence agreements are common for shorter or flexible arrangements. Stamp duty applies in either case under the state stamp law.

Can a company buy property in its own name?

Yes. The board must pass a resolution approving the purchase and authorising a signatory, and the title must be checked as with any purchase. Agricultural land in some states has restrictions on purchase by companies, and leasehold industrial plots usually need the development authority's approval for transfer.

What should a business do first when a customer stops paying?

Gather the contract, purchase orders, invoices, delivery proof and correspondence, and send a clear legal notice demanding payment by a deadline. If you are a registered micro or small enterprise, consider the MSME Facilitation Council. If the contract has an arbitration clause, the claim goes to arbitration; otherwise a commercial suit after pre-institution mediation, or a summary suit, may follow.