Various Legal Affairs Tips That Indonesian Startups Should Heed

Setting up a startup and delivering the right solutions and services is important, but not the only thing. In addition to focusing on technical matters, startups need to start caring about legal matters so as not to stumble into problems in the future.

Founder Lexar Ivan Lalamentik explained that startups that are negligent in managing legal documents will have difficulty accessing various available facilities, such as access to financing, investment, registration of intellectual property rights and others. This is because the management legal documents is the first requirement to turn a startup company into a professional and able to establish legal relationships with third parties.

"Usually, startups don't know the needs of their own startups, so they are constrained in seeing the right permits. This is usually because the business model is still unclear at the beginning, or it's clear but wrong in choosing the Indonesian Standard Classification of Business Fields (KBLI) for the code requirements for the license. "said Ivan.

The same thing was conveyed by the Founder and CEO my legal M. Philosophy. According to him, when a startup neglects or overrides legal cases, there are things that will become serious threats, such as losing momentum to get additional capital, duplication of similar businesses by competitors, takeover of trademarks, civil and criminal lawsuits against the founders because startups are considered a business. illegal, to the most severe freezing and closing of businesses.

"From experience What we get in the field, most startup founders are still new to knowing the right license for the business they are doing. The incompatibility of the permits they have with the business fields that are recorded in the deed and are currently running are obstacles and even new problems in running the business," explained Philosophi.

Established PT

To help startup businesses move quickly, startups should be under the tutelage of a limited company or PT. There are several things that must be prepared before the founders decide to create a PT, including a cooperation agreement between business founders that functions to regulate the rights, obligations, and responsibilities of each founder. A kind of joint commitment document.

Furthermore, the documents required include:

• Identity data of the Management and Shareholders. In the form of ID cards from shareholders and also NPWP.
• Name of PT. In accordance with the Company Law Number 40 of 2007 the name of the company consists of three syllables with the obligation to use Indonesian.
• PT domicile. Especially for the DKI Jakarta area, the domicile of the PT must be in an office or mixed zone area. As for other regions, it is adjusted to their respective Regional Regulations. As an alternative, the domicile of the PT can also use the address virtual office. For this domicile, it is also evidenced by proof of rent or office contract or a domicile statement from the building manager if domiciled in an office building.
• Business fields. This is adjusted to the 2017 Indonesian Business Field Book Classification (KBLI).
• Structure of Authorized Capital and Paid-Up Capital. In accordance with the Law on PT number 40 of 2007 the minimum authorized capital of PT is Rp. 50.000.000,- (fifty million rupiah) with a minimum paid-up capital of 25% of the authorized capital or a total of Rp 12.500.000 (twelve million five hundred thousand rupiah).
• Board of director. Minimum of two shareholders.
• Board of Management. Consists of at least one Commissioner and one Director.

"Startups must know the right type of business entity and legal entity to start their business and be associated with the targets the startup wants to achieve. The legal status of this appropriate company will be related to the licensing process which will make it easier to prepare documents than if the startup still doesn't have a goal clear business," Ivan added.

About Intellectual Property Rights

In order not to be mistaken, Intellectual Property Rights are divided into three, namely Trademarks (Goods or Services), Copyrights and Patents.

Especially for trademarks, what needs to be prepared is the logo and the name of the brand you want to register, the determination of the brand class can be seen in the Brand Classification system on the portal. DG IPR's Brand Classification System.

For documents, which need to be prepared for copyright on behalf of individuals:

• Power of attorney signed on stamp duty
• Affidavit of authenticity of work
• NPWP
• Work Sample

if the copyright is in the name of the company:

• Letter of transfer of rights from the creator of the work to the copyright holder
• Company TIN
• Deed of company
• Photocopy of the ID card of the applicant and the creator of the work

Preparation before funding

Ivan explained, in general, potential investors will due diligence, including legal aspects. What was requested from due diligence These are usually the deed of establishment and amendments thereto, business licenses, and other legalities such as agreements and others. Furthermore, there must also be documents shareholders agreement.

"This document is to find out how much control each shareholder has over your business. However, if shareholders agreement has never been created, so it is important for you and new investors to create one. In this agreement, you must explain in detail the general provisions, such as the rights and obligations of shareholders, distribution of dividends, voting rights, transfer of shares, protection for shareholders," explained Ivan.

Philosophi added, usually several other documents must also be prepared, such as financial documents (copies of company statements for the last 3-6 months, proof of tax deposits, current year financial statements), operational documents (employment agreements, partnership agreements, vendor agreement, business traction), and complementary documents and business plans such as future plans, innovations, and other targets.

"Why was the document prepared? Because almost 70% of investments failed in the process due diligence or in other words when checking documentation. If the investment continues in a condition where the company does not have complete documents, the consequence will be that the bargaining value of the company will be lower," added Philosophi.

Legal tips for startups

Ivan emphasized that every startup founder must have in-depth knowledge regarding the right type of business entity and legal entity to start his business. While Philosophi highlights how mindset startup founders become the basis for making it easier to complete legal documents in the future.

"[According to] the mindset of many startup founders today, legal is a cost that is irrelevant to business profits. So mindset should be changed to 'Legal is protection act, if you think compliance is expensive, try not to comply.' These quotes can be analogous to you having a trellis for the window of your house. If you compare it with the condition of a safe house, then the trellis is an unnecessary cost, but if you compare it with the condition of the house that has been robbed to the point of threatening the life of the homeowner, then the trellis cost is only a small cost to prevent the robbery, "explained Philosophi.

Several other things, according to Philosophi, which will also be useful in the future for legal matters include: making a risk management list to prepare for the anticipation of emerging risks; record all things, be it meetings, agreements, agreements, or others; and the last one has legal counsel right.