Publication date: 05.06.2024
The company's statutory documents: The basis of a successful business
In the business world, it is often said: "The devil is in the details." And this is especially true when it comes to the company's statutory documents. It is these papers, often underestimated by novice entrepreneurs, that lay the foundation not only for the legal structure of the company, but also for its future success. Let's consider in more detail why professional drafting of documents and their thorough analysis are critically important.
What are statutory documents ? In a broad sense, this is the entire package of papers necessary for the official creation and functioning of the enterprise: charter, founding agreement, minutes of founders' meetings, and others. However, in a narrower and more practical sense, three types of documents are key: the charter, the founding agreement (for some forms of enterprises) and the corporate agreement (agreement between the founders).
Let's start with the statute. This is a kind of "constitution" of the enterprise. It is in the charter that the name of the company, its organizational and legal form, location, goals of activity, amount of authorized capital, rights and obligations of participants, management procedure and many other important aspects are determined. Writing documents of this level requires not only legal literacy, but also strategic vision.
Oleksandr, the owner of an IT startup, says: "When we started, I thought that the charter was just a formality. I downloaded a template from the Internet, filled it out. A year later, when we started attracting investors, it turned out that our charter does not provide for many necessary provisions on the rights of minorities, mechanisms for exiting the business. Rewriting the document on the fly was a real horror."
This is a common mistake. Drafting documents, especially such fundamental ones as the statute, is not a routine operation, but a strategic task. A professional lawyer, working on the charter, will not only ensure its compliance with the law, but also predict the company's development scenarios for years to come.
The second key document is the founding agreement. It is not required for all forms of enterprises (for example, it is not mandatory for LLCs), but when it is, it regulates relations between the founders until the moment of state registration. Here the obligations of the parties regarding the establishment of the enterprise, the amounts of their contributions, and the order of joint activities are prescribed. In fact, this is the first serious contract between future business partners.
Maria, the co-owner of a chain of coffee shops, recalls: "My friend and I started a business based on trust. We rented premises together, invested money without recording who and how much. When things went up and we decided to open a second outlet, arguments began: who invested more, who has what rights. If they had turned to a lawyer to draw up a contract, many problems would have been avoided."
Maria's story illustrates why drawing up a contract is not a formality, but a necessity. A good lawyer will not only record contributions when drafting the founding agreement, but also provide mechanisms for resolving potential conflicts. This can be a provision on mediation, clear criteria for evaluating intangible contributions (ideas, connections, reputation) or even scenarios of "divorce" of partners.
The third, relatively new, but very important document is a corporate agreement, or an agreement between LLC participants or shareholders. This tool appeared in Ukrainian legislation relatively recently, but it has already become a powerful means of flexible regulation of relations within the company.
A corporate agreement is a kind of "fine-tuning" of the charter. The general framework is prescribed in the charter, and special conditions can be detailed in the corporate agreement. For example, determine how participants will vote on certain issues, set restrictions on the sale of shares, agree on the procedure for distributing profits. This is especially important if the participants include minorities or investors with special requirements.
Making an agreement of this type is a real art. It should be as individualized as possible, take into account the interests of all parties and at the same time not contradict the statute and the law. A lawyer working on such a document must not only know the rules, but also deeply understand the business context.
Ihor, the managing partner of the law firm, says: "When we are approached to draw up a corporate agreement, we always start with a thorough analysis. We analyze the company's charter, financial documents, market position. Without this, it is impossible to conclude a truly effective agreement."
It is worth emphasizing: analyzing documents is not just reading them. Legal analysis of documents is a complex procedure that includes checking for compliance with legislation, identifying gaps and risks, and assessing the consequences of each provision. When it comes to such basic documents as the articles of association or articles of incorporation, legal analysis becomes critical.
But the work does not end there. After document drafting and document analysis analysis, there is a stage of proofreading. Proofreading documents, contracts, agreements is not just proofreading. This is the last line of defense, where ambiguities are caught, wording is clarified, and the logical sequence of points is checked. An ill-chosen word in a contract can cost millions, so the proofreading of the agreement by a lawyer, etc
