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Different laws related to startup

Different laws relate to start-up
A startup venture could be defined as a new business that is in the initial stages of operation, beginning to grow and is typically financed by an individual or small group of individuals. It is a young entrepreneurial, scalable business model built on technology and innovation wherein the founders develop a product or service for which theyforesee demandthrough disruption of existing or by creating entirely new markets. Startups are nothing but an idea that manifests into commercial undertaking.

A startup venture could be defined as a new business that is in the initial stages of operation, beginning to grow and is typically financed by an individual or small group of individuals. It is a young entrepreneurial, scalable business model built on technology and innovation wherein the founders develop a product or service for which theyforesee demandthrough disruption of existing or by creating entirely new markets.

Startups are nothing but an idea that manifests into a commercial undertaking a startup venture could be defined as a new business that is in the initial stages of operation, beginning to grow and is typically financed by an individual and small group of individuals. Startup is nothing but an idea that manifests into a commercial undertaking. Starting a new business includes many things.[i] Every business person should know the basic steps of the startup laws. Before starting the new business you should look at the vital startup laws which help you for a long journey.[ii]

So there are some basic laws you all should know:
A startup venture could be defined as a new business that is in the initial stages of operation,
beginning to grow and is typically financed by an individual or small group of individuals.

It is a young entrepreneurial, scalable business model built on technology and innovation wherein the founders develop a product or service for which they foresee demand through disruption of existing or by creating entirely new markets. Startups are nothing but an idea that manifests into a commercial undertaking Grant Thornton (2016Starting a new business includes many things.

Every business person should know the basic steps of the startup laws. Before starting the new business you should look at the vital startup laws which helps you for a long journey. So there are some basic laws you all should know :

Law Related to Taxes
If you are running any kind of business this is the first step that you should know and follow. It means that you have to pay the taxes to the state and central government or local bodies and it become compulsory for every new businessman to be aware about every details of accounting. Different sectors have different tax laws. The provisions of GST Act that governs taxpaying limit for the business houses. Every business houses is required to follow certain set of patterns of accounting and maintain records of assets and liability of the entity can easily make out the profits and losses born by such business.

A Laws related to Information of Technology
Technology is the base of every entity indulging in any type of business.[iii]In today’s time if you establish your organization it should be high in digitalized world, there are IT laws in the business. We all know that we are living in a advanced technological world and things like e-contracts, digital signatures, protecting the private data of the organization and this is also a extremely important practices. So having the knowledge of IT laws will help the organization in exploring the business. Being advance in the matter of technology helps a lot in achieving the goal of the organization.[iv]

Contract law and dispute resolution
All the contracts are very important for the entrepreneurs. Business will come to end without the use of contracts. In case any dispute stand up between the employer-employee or between employee-employee as per what provision the dispute will be solved is considered to be the predominant requirement. The entrepreneur can even evolve an agreement with the employee ,then what rules will be followed while performing such agreements also need to be find out by the entrepreneur. So the knowledge of basic principles of contracts laws is required.[1]

Intellectual Property laws
property rights are the vested rights that one gets with the property. This is the legal right of the business that every kinds of business should have. It deals with the rules which secure the invention, newness, innovative idea, and artistic work of any person. So this intellectual property laws gives that an innovative idea has a legal right so that no one can copy that thing and that’s why this is very important in before starting a startup.[v] These laws originated from the TRIP’S Agreement.

There are mainly four Acts that govern the provision of Intellectual property laws:
Patent Act, 1970- Patent system is a contract between the inventor and authority whereby the inventor gets exclusive rights for a period of 20 years in return for disclosing full details of the invention. The main purpose of patent system is to encourage innovation and eventually results in technological development. The core objective of the patent law is to promote the progress of Science and useful arts. It can be listed as: To encourage inventor: If a person puts efforts and resources in invention something that can be patented, he should have a provision that stops others from copying his work without his permission.[vi]

Trademark Act, 1999- Trademark is defined in the Trademark Act, 1999 as, “trademark means a mark capable of being represented graphically and which is capable of distinguishing the goods or services of one person from those of others and may include the shape of goods, their packaging and combination of colours.” The object is to provide for registration and better protect of trade marks for good and services and for the prevention of the use of fraudulent mark.[vii]

Designs Act ,2000- "design" means only the features of shape, configuration, pattern, ornament or composition of lines or colours applied to any article whether in two dimensional or three dimensional or in both forms, by any industrial process or means, whether manual, mechanical or chemical, separate or combined, which in the finished article appeal to and are judged solely by the eye; but does not include any mode or principle of construction or anything which is in substance a mere mechanical device, and does not include any trade mark as defined in clause (v) of sub-section (1) of section 2 of the Trade and Merchandise Marks Act, 1958 (43 of 1958) or property mark as defined in section 479 of the Indian Penal Code (45 of 1860) or any artistic work as defined in clause (c) of section 2 of the Copyright Act, 1957 (14 of 1957).[viii]

Copyright Act, 1957- Like patents, copyrights also protect the creative endeavor of an owner. But, they pertain to intellectual property. In simple words, copyright protects original works of ownership. It gives an exclusive right to do or authorize others to do certain acts in relation to literary, dramatic, musical, and artistic works, cinematography and sound recordings.

A copyright protects the intellectual property, for the life of the originator plus 50 years. In case of cinematographic work, the period of protection is 50 years after the work has been made available to the public and for photographic works 25 years after the making of the work.
  1. Encouragement to the Original Work:
    The main objective of the Copyright Act is to encourage authors, composers, artists, and designers to create original works by rewarding them with the exclusive right for a limited period (usually for the life of the originator plus 50 years) to exploit the work for monetary gain.
  2. Protections to the Originator:
    The objective of copyright law is also, in essence, to protect the author or the creator of the original work from the unauthorized reproduction or exploitation of his/her materials. The right also extends to prevent others from exercising without authority any other form of right attached to copyright, for example, in case of literary work, the right of translation, adaptation or abridgement.[ix]
Labour laws
Every business requires some manpower to do the work and they are known to be employees of such company. Appointing an employee require certain provision to be followed which are set by the labour laws.Irrespective of the size of the establishment, you need to adhere to the labour laws. These laws could be with regard to minimum wages, gratuity, PF payment, weekly holidays, maternity benefits, sexual harassment, and payment of bonus and so on.[x]

Some certain statutory laws are:
(i) Factories Act, 1948 and amended provision of act in 2016 - The factories Act, 1948 is a beneficial legislation. The aim and objective of the act is essentially to safeguard the interests of workers, stop their exploitation and take careof their safety, hygiene and welfare at their places of work. It casts various obligations, duties and responsibilities on the occupier of a factory and also on the factory manger. Amendments to the act and court decisions have further extended the nature and scope of the concept of occupier, especially vis-a-vis hazardous processes in factories. This act regulates the working conditions in factories; regulate health, safety welfare, and annual leave and some special provision in respect to young persons, women and children who work in the factories.
  1. Working hours: According to this provision working hours of adults, no adult’s worker shall be required or allowed to work in a factory for more than 48 hours in a week. There should be a weekly holiday.
  2. Health: For protecting the health of the workers, the act lays down that every factory shall kept clean and all necessary precautions shall be taken in this regard. The factories should have proper drainage system, adequate lighting, ventilation, temperature etc.
  3. Saftey: In order to provide safety to the workers, the act provide that the machinery should be fenced, no young person shall work at any dangerous machine, in confined spaces, there should be provision for manholes of adequate size so hat in case of emergency the workers can escape.[xi]
(ii) Contract Labour (Regulation and Abolition) act, 1970- The Object of the Contract Labour Regulation and Abolition) Act, 1970 is to prevent exploitation of contract labour and also to introduce better conditions of work.The Act applies to the Principal Employer of an Establishment and the Contractor where in 20 or more workmen are employed or were employed even for one day during preceding 12 months as Contract labour. This Act does not apply to the Establishments where work performed is of intermittent or seasonal nature.Section 7 and Rules 17 & 18 of the Contract Labour (Regulation and Abolition) Central Rules, 1971, it appears that the Principal Employer has to apply for registration in respect of each establishment. Other important point to note is that a License issued for One Contract cannot be used for entirely different Contract work even though there is no change in the Establishment.[xii]

(iii) Employee State Insurance Act, 1948- The Employees State Insurance Act of 1948 has been enacted with the objective of securing financial relief in cases of sickness, maternity, disablement and for providing medical benefits to employees of factories and establishments, and their dependents. The act is also applicable to non-seasonal factories using power and employing 10 or more employees, and non- power using factories and certain other establishments employing 20 or more employees.[xiii]

(vi) The Payment of Gratuity Act, 1972- Payment of Gratuity Act was enacted with an objective to provide a Scheme for payment of gratuity to employees engaged in factories, mines, oilfields, plantations, ports, railway companies, shops or other establishments and matters connected therewith or incidental thereto. It is welfare legislation and intended to recognise and reward those workmen who have rendered long and faithful service to the employer.[xiv]

(vii) The Industrial Employment (Standing Orders) Act, 1946 The objective states that the act is to provide regular standing orders for factories, workers and the main professional or working relationship. To ensure that all employees recognize their employment terms and conditions they are expected to follow or adhere to. This is to help minimize the exploitation of workers against their will and knowledge. It also supports the promotion of industrial peace and harmony by supporting fair industrial practices.[xv]

The Industrial Disputes Act, 1947- The main purpose of the Industrial Disputes Act, 1947 is to ensure fair terms between employers and employees, workmen and workmen as well as workmen and employers. It helps not only in preventing disputes between employers and employees but also help in finding the measures to settle such disputes so that the production of the organization is not hampered.

Objectives of Indian Industrial Dispute Act:
  1. To encourage good relations between labour and industries, and provide a medium of settling disputes through adjudicator authorities.
  2. To provide a committee for dispute settlement between industry and labour with the right of representation by a registered trade union or by an association of employers.
  3. Prevent unauthorized strikes and lockouts.
  4. Reach out to labour that has been laid-off, unrightfully dismissed, etc.
  5. Provide labour the right to collective bargaining and promote conciliation.

New Indian Industrial Dispute Act Principles:
  1. A permanent conciliation committee for the speedy settlement of industrial disputes.
  2. Compulsory arbitration in public utility services and enforcement of arbitration awards.
  3. Strikes during proceedings of conciliation and arbitration meetings are prohibited.
  4. Set aside specific times for conciliation and arbitration meetings.
  5. Employers have to be obliged to communicate with labour unions.
  6. Mutual consultation has to be set up between industry and labour by the Works Committee.
  7. Disputes between labour and industry have to be forwarded to an Industrial Tribunal. If the Industrial tribunal fails to handle the case, the case should be forwarded to the appropriate government.[xvi]

The Trade Unit Act, 1926- A trade union is an association of workers formed with the object of improving the conditions of workers. It is formed for protecting the interests of workers. Workers have little bargaining capacity when they are unorganized. In fact, trade union movement began against the exploitation of workers by certain managements under the capitalist system.
Objective of trade union:
  1. To improve the economic lot of workers by securing them by better wages.
  2. To secure for workers better working conditions.
  3. To secure bonus for the workers from the profits of the enterprise/organization.
  4. To ensure stable employment for workers and resist the schemes of management which reduce employment opportunities.
  5. To provide legal assistance to workers in connection with disputes regarding work and payment of wages
  6. To protect the jobs of labour against retrenchment and layoff etc.
  7. To ensure that workers get as per rules provident fund, pension and other benefits.
  8. To secure for the workers better safety and health welfare schemes.
  9. To secure workers participation in management. [xvii]

Company law
The company is an association of two or more person in furtherance of a common business objective. A company is a “separate legal entity” having its own identity from its members. As a legal entity, a company can own a property in its own name, can sue and to be sued in its own name and also enjoy perpetual succession, among others.[2] There is registration under the company act 2013, when certain entity is established in form of company or proprietary; FSSAI License, when one has to open retail shop restaurant, trade outlet etc; Shop and Establishment Act License;these are the provision which is required to know deeply to forming a startup.

Suggestion:
  1. Creating awareness in market –start-ups fail due to lack of attention to limitation in markets. The environment for the startup is usually more difficult than for an established firm due to uniqueness of the product and to follow the various laws. The situation is more difficult for a new as the startup has to build everything from scratch.[xviii]
  2. Regulation- starting a business requires number of permissions from the government agencies. Although there is a perceptible change, it is still a challenge to register a company. Regulation pertaining to labour laws, intellectual property, contract law etc. Are rigorous in India . So there is lack of implementation regarding to startup.[xix]
  3. Efficiency – established companies have high administrative overheads. Start-up offer their services in a more efficient, cost-effective and competitive manner. They must be focus on their goal.
  4. Team leadership - There must be a proper relation between the employee and the management of the company .this cause good governance in an entrepreneur which result easily to achieve main aim of the company.
  5. Personalization-Startups deliver their products and services with a personal touch. This creates a uniquely personal experience for their customers. Startups also take time to study and understand their customers’ business requirements. This allows them to build lasting relationships with specific offerings and responsive solutions.
  6. Flexibility- your organisation could have unique needs and demand for product and services. It is not enough for operating in a rigid manner so the startup are more flexible and more likely to work at the hours, the place and in effective use of resources.
  7. Accountability- Better planning process sets expectance and results. It’s a tool for regular review of what’s expected and what happened. Good work shows up better accountability.
  8. Manage cash- Good business planning connects the dots in cash flow. Sometimes just watching profits is enough. But when sales on account, physical products, purchasing assets, or repaying debts are involved, cash flow takes perfect planning and management. A plan helps you see the problem and adjust to it.
  9. Set priorities- You can’t do everything. Business planning helps you keep track of the right way. We must allocate the resources in a strategically manner and in perfect time period so the resources can use in effectively manner.
  10. Perfect planning- Start-ups and smaller business hub have less structured. They are keep improving their business models, processes, and portfolio. So that they can maintain a good relation which result to achieve its goal so there must be a proper planning and also keep updating frequently.
  11. New innovation- startup must be seeking new technologies and support innovative ideas to become a strong player in a market.
  12. Already backup strategic- Does your day to day work fit with your main business strategic. So there must be secured to bear losses and must have a backup plan ready so that you can match with your main goal.
  13. Transparency- It should deal with transparency and fairness in each aspect of the business and must have a proper code of conduct so they become a model for other startup.
  14. Raise economy- As some startup have a global vision and have been able to use entrepreneurial possibilities in foreign markets from the very beginning of their activity. So that they give a valuable inputs in the economy of a country.

Conclusion:
A Start-up is a company working to solve a problem where the solution is not obvious and success is not guaranteed. A start-up is a company that is in the first stage of its operations. A successful start-up cannot start a business just with passion and an idea.

Lack of awareness, multiple clearances regarding laws, and unorganised market so on is the regulatory obstacles in Indian system of governance. As Indian system of governance is based on the laws that are formulated for every type of work. So starting the business houses governed by many different laws and every business hold different laws for every kind of conduct in the business entity.

End-Notes:
  1. https://www.researchgate.net/publication/323855305_INDIAN_STARTUPS-_ISSUES_CHALLENGES_AND_OP PORTUNITIES by gopal das pawan kumar
  2. https://www.monsterindia.com/career-advice/5-basic-startups-laws-which-every-entrepreneur-should-know-7061.html
  3. synopies
  4. Supra note
  5. Supra note 2
  6. https://www.lexology.com/library/detail.aspx?g=3f92413f-107c-4886-aca7-24633a341e22
  7. http://www.ipindia.nic.in/about-us-tm.htm
  8. http://www.ipindia.nic.in/writereaddata/Portal/IPOAct/1_58_1_design_act_1_.PDF
  9. http://www.yourarticlelibrary.com/speech/speech-on-copyrights-meaning-and-objectives/41155 dk sinha
  10. https://yourstory.com/mystory/7-basic-laws-every-startup-entrepreneur-should-kno
  11. http://www.legalserviceindia.com/legal/article-149-the-factories-act-1948.htmlsmriti tiwari
  12. http://www.legalserviceindia.com/articles/labour_contract.htmWritten by: Paras Jain - Company Secretary, Pokarna Limited, Secunderabad
  13. https://paycheck.in/career-tips/women-paycheck/women-legislation/esi-act-1948
  14. https://www.caclubindia.com/articles/a-look-at-the-payment-of-gratuity-act-1972-15682.asp a look of at the payment of grauity act 1972 gs rao
  15. https://www.toppr.com/guides/legal-aptitude/labour-laws/industrial-employment-standing-orders-act-1946/
  16. http://www.legalserviceindia.co
  17. m/legal/article-942-industrial-disputes-act-1947.htmlIndustrial Disputes Act, 1947
  18. http://www.yourarticlelibrary.com/trade-unions/trade-union-meaning-objectives-and-benefits/90560Trade Union: Meaning, Objectives and Benefits
    Article shared by: By Akshaybatheja
  19. Supra note 1
  20. Supra note1

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