Basic agreements – legal documents and shareholders agreements

While building your limited company there are some basic things you’ll look into such as legal documents and other basic agreements which have a legal dimension.

In the UK you’ll need to register your new company with Companies House to incorporate it, stating, in the example of a private limited company by shares, how the shares are divided between those involved. You will also need to understand laws covering how to protect yourself, your staff and customers, and potentially intellectual property (IP) aspects such as trademarks and copyrights.

Example basic legal documents and agreements

Basic legal documents and agreements typically come up in relation to many of these areas, and include for example:

  • When you have two or more people involved in a business, it’s best practice to set up a shareholders agreement so that everyone knows where they stand.
  • If you need to protect your ideas and innovations in those early stages of your business a non-disclosure agreement (NDA), often referred to also as a confidentiality agreement, will let you share information in confidence with third parties.
  • If your business is growing and you need to take on staff you are required by law to give an employee a ‘written statement of employment particulars’ if they are to work for you for more than a month. An employment contract lets both employer and employee be clear on the respective rights and duties of the other, and you can cut down on the risk of disputes.
  • Non-Executive Directors (NED) can play a key part in a company’s governance strategy, and help by offering an independent view on areas such as performance, standards and strategy. Before a company adds a NED to their team however, it makes sense to be clear what their duties will be from the start and a basic agreement such as an NED appointment letter can ensure this is done.

Legal health promotion

Such basic agreements can help with what expert legal commentators have termed ‘legal health promotion’ and these simple documents enable problems and disputes to be avoided rather than dealt with, potentially through the expensive engagement of legal providers, later on.

It is human nature to want to avoid trouble rather than have to deal with it when it happens and simply by creating basic legal agreements at the outset small, cost conscious, businesses can take a sensible and risk managed approach to everyday operations when they are impacted by the law.

And with the never ending march of the Internet and technology, options are now available to small businesses to create basic legal documents both cost effectively and taking into account their unique circumstances.

Online legal providers are today leveraging technology which enables a business to complete a questionnaire to output a basic legal agreement which is tailored to its circumstances based on the answers provided. These systems also enable guidance to be provided to the non-lawyer so they can be clear on what information is needed.

Such technology, which deals with the legal detail ‘behind the scenes’, is therefore changing how small businesses engage with the law and the cost at which they can take advantage of the many benefits and advantages the law can provide, even if no problem has arisen.

As a result basic legal documents and agreements are becoming very much that – basic – and can now be created and used much more easily and quickly for the benefit of everyone. And, by allowing small businesses to care of some of their legal affairs on their own, at vastly reduced costs.


Please note the information on this website does not constitute legal advice.

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