When do you need to meet an Advocate for Corporate Matters?
Rare is the company that wakes up one day with a “corporate legal problem”. Warning signs tend to sneak up on you.
Suddenly one founder is making unilateral decisions. Or a buyer won’t pay. Or a vendor sends a termination letter. Or an investor asks for paperwork you never thought to keep. Perhaps a shareholder dispute has gotten nasty. Or you get a notice from the Registrar of Companies (ROC), tax department or another government regulator.
By the time your corporate problem has become big enough for you to recognize it as a problem, it can often cost you much more to fix than it would have to seek legal guidance at the outset.
Whether you’re a startup, MSME, family business, professional practice or an established corporation, meeting with Advocate BK Singh early can help you spot contractual, corporate, compliance and dispute risks before they become full-blown problems.
Corporate legal services aren’t just about fighting your battles in court. They can also include reviewing agreements, protecting shareholder rights, understanding the duties of directors, resolving business disputes, responding to legal notices, investigating compliance issues and selecting the most effective dispute-resolution option.
The question you should not be asking is: “Do I need to hire a lawyer?”
The question to ask is: “Has this business decision exposed the company to a legal risk that merits analysis before we go any further?”
Asking the second question will save you time, money and headaches.
When does your business in India need corporate legal advice?
Indian business owners face legal risks when making commercial decisions. You could be handling contracts with employees, vendors, customers, landlords, lenders, investors; managing IP, taxes, company compliance items; dealing with shareholders and directors; or resolving disputes.
Indian companies operate under the Companies Act, 2013. They also must follow laws regarding directors, shareholder meetings, disclosure of interest, related-party transactions, financial statements, investigations, ROC filings and more.
Legal issues can overlap with other areas of practice. A contract dispute may lead to arbitration. A shareholder matter may raise company law issues. Outstanding invoices can become recovery matters. An investment deal can involve corporate due diligence and regulatory due diligence.
Operating a business in Delhi NCR is no exception. Whether you run a shop in Delhi, New Delhi, Noida, Greater Noida, Gurgaon, Ghaziabad, Faridabad, Meerut, Hapur or anywhere else, your commercial activities could impact employees, assets, contracts and more throughout India. The same is true if you’re located in Lucknow, Kanpur, Varanasi, Prayagraj, Agra, Jaipur, Vijayawada, Pune, Chennai, Mumbai, Hyderabad, Bengaluru, Kolkata or any other Indian city.
Quick Facts
- India’s main business formation act is called The Companies Act, 2013.
- Section 166 includes the duties of directors. This section includes the statutory duties to carry on a director’s duties in good faith, with due care, and independently.
- Section 184 Directors’ disclosure of interest. Section 188 Related party transactions.
- Examples of situations where a company may need Corporate Legal Advice can include needs involving contracts, shareholder disputes, company compliance, business disputes, restructuring issues, or commercial transactions.
- Receiving a legal notice does not always mean that litigation can’t be avoided.
- Arbitrating, mediating, negotiating or fighting in court are all better options depending on the contract you have entered into and the facts involved.
- Every Situation Is Different. The correct legal response will depend on your company’s governing documents, the facts of the situation at hand, any relevant deadlines, and your commercial goals.
What Does Corporate Legal Advice Actually Cover?
Corporate Legal issues apply to a business’ legal structure, decisions made by the business, contracts the business enters into, business relationships, and future business disputes.
Let’s translate that into English. Corporate lawyers can help you figure out what your business can and cannot do. They can help you know what you should not do. They will highlight what documents you should have on hand to support any business decisions you make. Finally, they will explain to you what legal consequences you may face based on your business decisions.
A corporate lawyer could review a shareholder or founder’ s agreement for a small startup before the founders think there is even a problem. A corporate lawyer could negotiate and review terms with a major customer for a burgeoning business. An established business may have many questions about shareholder rights, director duties, restructuring alternatives, compliance issues with regulations, or commercial litigation.
Corporate Legal Advice Is Not Only Needed For Big Businesses
Because the name sounds like it, corporate lawyers do not solely work with big businesses. Any privately held company, LLP, Indian startup, family business, or small- or medium-sized business can be exposed to severe legal risks.
Under which law matters relating to companies can be governed?
In India, company–law related issues are governed by the Companies Act, 2013. The major provisions of the Companies Act, 2013 include – Incorporation, share capital, borrowing, accounting, management and administration, directors, powers of Board of directors, Investigations, compromises, arrangements, oppression and mismanagement, winding up, and matters relating to National Company Law Tribunal.
Directors also owe duties of their own under statute. For example, Section 166 requires directors to act in accordance with the articles of the company and to the best of his abilities – (a) in good faith; (b) with reasonable care, skill and diligence; and (c) independently and free of any conflict of interest.
Depending on the facts of your transaction, other areas of law may become implicated. A few examples would include contract law, arbitration, insolvency, taxation, intellectual property, labour and employment law, FEMA-related laws or laws specific to the industry you operate in.
For this reason, we think it’s best to start with the transaction (or other problem) you need help with and work backward to identify which areas of law may apply. Instead of starting with an assumption about needing “business law”.
As the official Corporate, Commercial & Taxation service page of BK Singh Advocate. contracts, commercial disputes, recoveries, complying with litigation, Corporate documentation, business restructuring are legal services we provide.
Who should hire Corporate Lawyers?
Startups/Entrepreneurs
Entrepreneurs are often very trusting. And that is completely alright. However, you can run into trouble down the line if you don’t properly define ownership stakes, decision making power, intellectual property, contribution to funding, and exit terms etc.
Have a corporate lawyer review your agreements, ownership structure, key contracts and any obligations you may have already agreed to if you’re starting a business with someone. This is especially helpful before you take on an investor or plan to scale your business.
MSMEs and Family businesses
Just because your small business doesn’t have a legal department doesn’t mean you aren’t exposed to legal risk.
Payment disputes with customers, suppliers, franchisees, dealers, employees or non-payment by customers are all common examples. Many of these can be resolved amicably through negotiations. But sometimes it helps to know what your legal rights are before you meet with the party to negotiate. Should you send a legal notice? Can the matter be referred to arbitration? Do you need to file a recovery suit? Speak to Advocate BK Singh during a consultation to find out.
Existing Businesses
Small businesses face the matters discussed above. But as businesses get bigger, they have to face different issues too. Transactions can get complicated as you expand. You may need help with amendments to shareholder agreements, appointing new directors, drafting contracts, restructuring your corporate group, acquisitions, regulatory issues, and much more.
Corporate laws are very important to help you with these situations. And when money is involved in bigger transactions, there is more risk.
Businesses at this stage don’t just need a lawyer to help them when problems arise. They require advisors who can help them anticipate legal risk.
When should you speak to a corporate lawyer?
Ideally, before you sign that big legal document. Or before a brewing dispute hardens.
Here are a few scenarios where a company should consider speaking to an advocate:
- You or your company is about to sign (or substantially re-negotiate) a key contract.
- You have a dispute with a co-founder, shareholder or director.
- Your customer / supplier has defaulted on an important agreement.
- You get served a legal notice.
- You get a notice from a regulator or related to ROC filings.
- An investor, purchaser or strategic partner is doing diligence on your business.
- Your company is being restructured, merged, acquired or sold.
- You have a large outstanding commercial debt.
- There is a dispute- resolution clause in your contract.
- You want to sue another company (or get sued)!
No doubt, sometimes meeting an advocate does lead to a lawsuit. But often it’ doesn’ t.
Instead it’ s about understanding where you stand before you take your next business step.
How can a corporate lawyer help you?
First things first – an intelligent commercial discussion will usually start with the documents. You give the background, highlight your immediate concern and provide any contracts, emails, legal notices, invoices, company documents or whatever else is available. From there, the advocate would normally assess the legal issue, your contractual rights, the evidence, any potential risks and whether the matter is amenable to negotiation, mediation, arbitration or litigation (and what outcome you are seeking). They might then draft/review any documents, send a legal notice, negotiate with the other side, attempt mediation/arbitration or discuss litigation. Every case is different, and the process won’ t always be linear.
BK Singh Advocate’s approach to commercial litigation is also very document driven. They look at legal deadlines, limitation, maintainability, the evidence and the commercial objective of the matter at hand. As you can see from their work page, their process starts off by understanding the documents and assessing limitation, maintainability, evidence and possible remedies too.
In case you’ re a business involved in a commercial dispute, they have a specialist team who can also advise on Arbitration & Alternative Dispute Resolution. Their Arbitration & ADR team can help you with arbitration, mediation, conciliation and negotiating a settlement.
Documents a business should have
As mentioned earlier a commercial lawyer can represent you better if your business has kept organised and reasonably complete records.
This list of documents is not exhaustive, but depending on the situation, it can include:
- Certificate of incorporation and other supporting documents
- Memorandum and Articles of Association, if applicable
- Shareholding & Board membership details
- Founders/shareholder agreements
- Contracts and any amendments
- Purchase orders, delivery notes and invoices
- Emails, letters and any business correspondence
- Payment history, including bank statements
- Notices and reply-letters
- Board resolutions and meeting minutes
- Correspondence with regulators/ ROC
- IP registrations, if any
- Employee or consultant contracts
- Loan or security agreements
- Previous offers or settlement agreements
If a dispute is looming, don’ t destroy, alter or “ pick and choose” which records you keep. Your chances of proving your case can be destroyed by an incomplete set of documents.
When should you meet an advocate for corporate matters?
Meet an advocate when enough money, shares, contractual rights or regulatory stakes are involved in a decision that if things go wrong, it could materially affect the company.
You don’ t need a lawyer to read every email or approve every purchase order your company makes (although if your purchase orders are $1 million – that may be worth thinking about). But you should think about having a professional review your documents / situation when:
- you’ re negotiating a key contract;
- shares / management are being transferred;
- a dispute starts brewing;
- you receive a legal notice;
- large sums of money are due;
- a company is entering into another material transaction;
- a regulatory issue comes up; or
- you are being invested into or facing due diligence.
If you speak to an advocate early on, they can help you understand where you stand legally before a dispute escalates and becomes expensive.
How can Advocate BK Singh help you?
BK Singh Advocate’ s Corporate, Commercial & Taxation practice covers legal matters relating to businesses such as commercial disputes, agreements, recovery, compliance driven lawsuits and documentation.
As a business owner, you should be focused on running your business – not how to create litigation. With the right legal advice early on, you can understand your legal position, preserve important documents, know what options are available to you and choose a prudent course of action.
Advocate BK Singh can assist businesses and professionals with Legal Document Review, Commercial Disputes, Documentation, Negotiations, Litigation and more. Also, depending on the facts and specific legal requirements of the matter, our Arbitration & ADR attorneys can also assist you if the dispute involves an arbitration agreement.
Don’ t hesitate to seek legal help if your business faces any corporate issues that are too big for you to handle alone. BK Singh Advocate offers legal help with corporate matters in Delhi NCR as well as all over India.
Frequently Asked Questions
Q.1 At what stage should my business hire a corporate lawyer in India?
Ans. Prior to entering into major contracts, making large investments, when changing ownership, in large disputes, if dealing with regulators or before making any major commercial decisions which can be expensive to get wrong.
Q.2 Should small businesses hire corporate lawyers?
Ans. Yes. Small companies can still face commercial disputes. MSMEs, startups and family businesses all need contract advice, recovery, shareholder issues, compliances and dealing with regulatory risk.
Q.3 What services can a corporate lawyer provide for my business?
Ans. Corporate lawyers can review your agreements, advise you on company-law related matters, help you assess commercial disputes, assist with legal notices, review legal documents, advise on resolving disputes and represent you during litigation or arbitration.
Q.4 Can a lawyer review the contracts my business signs?
Ans. Yes. Having a contract reviewed can allow you to understand payment terms, termination clauses, liability limitations, intellectual property rights, confidentiality clauses and dispute resolution processes before you sign a contract.
Q.5 I received a legal notice for my business. What should I do?
Ans. Don’t destroy the notice or any related documents. Don’t panic. But do get legal advice quickly. The appropriate course of action will depend on the specifics of the allegations, the contract, other relevant documents and the applicable law.
Q.6 Do my corporate dispute have to be litigated in Court?
Ans. No. Negotiations should always be attempted first. Mediation, conciliation or arbitration can be explored depending on your contract and facts of your case. No two disputes are identical.
Q.7 Can a corporate lawyer help if there are disputes between shareholders?
Ans. Yes. Corporate lawyers can help resolve shareholder disputes. But this depends on your company’s structure, its Memorandum and Articles of Association, any shareholders agreements in place, the nature of the actions complained of and what the complainant wants.
Q.8 Why should startups care about contracts?
Ans. Written agreements on who owns what, who makes decisions, whose intellectual property is whose, who gets what on investment or exiting can help avoid confusion later if your business relationship with someone changes or your business grows.
Q.9 Is the Companies Act, 2013 applicable to directors?
Ans. Yes. The Companies Act, 2013 does make reference to directors. Also, there are specific duties of directors mentioned in Section 166 of Companies Act, 2013.
Q.10 How can Advocate BK Singh help with corporate issues?
Ans. Advocates BK Singh can assist you with corporate and commercial law matters relating to your business including documentation, contracts, compliance disputes, recovery of dues, negotiation, arbitration, litigation and more.
Conclusions
Nine times out of ten, the best time you will receive advice is before you sign that big contract. Before the shareholder dispute escalates. Before you send that reply to a legal letter. Before the commercial dispute gets expensive. For businesses in Delhi NCR or India in general, the smart play is to have the documents reviewed, understand your legal position and reply accordingly ie. what’s reasonable for the risk you potentially face. Advocate BK Singh can help businesses understand their legal position on corporate/commercial/dispute matters. Obviously this is subject to the facts and the law applicable to those facts. Having your document reviewed won’t guarantee that you can get a certain commercial outcome. What it will do is allow you to make an informed business decision knowing exactly where you stand legally.
