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Let's say you're an investor. You have heard the pitch, like the product and the team and see a lot of potential in the ...
02/08/2022

Let's say you're an investor. You have heard the pitch, like the product and the team and see a lot of potential in the startup. Is trusting the information the founders provided enough to fund the company? Of course not. Everything has to be verified.

Due diligence is the process of collecting information and documents and verifying what was shared by the startup. It helps investors reduce risks involved in the investment by assessing business and market potential, financial statements and forecasts, legal documents and all sorts of risks.

Most commonly, due diligence is conducted in two to three stages, the first being "screening due diligence", which is a basic assessment of a company's fit for the investor's objectives and criteria. The second is the "business due diligence". And finally comes "legal due diligence".

In legal due diligence, the startup will be sent a due diligence list, which contains the requested documents that must be uploaded to the investor's data room. The documents will include: financial, legal, intellectual property, sales, marketing, human resources and lists of property and equipment assets.

There will also be a due diligence questionnaire. Some investors include all of the questions in one lengthy questionnaire and some split them into multiple questionnaires based on the topic (financial, legal, compliance, etc).

Due to the amount of work that goes into the legal due diligence portion, it is best to organize the expected documents as much as possible in advance of receiving the due diligence list.

If you would like a list of documents that are normally requested during due diligence to start building your own data room, feel free to message us.

In the UAE, a Consultancy Agreement (also known as "Independent Contractor Agreement" or "Freelancer Agreement") should ...
26/07/2022

In the UAE, a Consultancy Agreement (also known as "Independent Contractor Agreement" or "Freelancer Agreement") should be used for individuals who will be hired to fill a certain role or work on a specific project, but not as a visa-sponsored employee and usually without additional employment benefits (such as insurance, annual tickets, etc).

A description of the role or services being required, the place where services will be fulfilled (in the company's office or remotely), any specific working hours (eg. 9 am - 6 pm) or number of hours expected per week/month and any specific deliverables should be mentioned in the agreement.

In addition, it is important to include that this individual is an independent contractor and not an employee, and is not entitled to the benefits that employees of the company would normally receive (unless otherwise agreed).

Of course, the fees that will be paid, as well as when and how the payment will be made should be incorporated in the contract. The length of the contract and beginning and end date (if any), in addition to the reasons for termination and notice period are also must-haves.

It is also good practice to include confidentiality, intellectual property and work product assignment and non-compete (if applicable) clauses.

If you require a consultancy agreement for your business, contact us for more information.

A trademark (™) registration grants the exclusive right to use the TM in the countries/regions in which it is registered...
19/07/2022

A trademark (™) registration grants the exclusive right to use the TM in the countries/regions in which it is registered. Registration provides a strong legal position for the TM owner in case of unlicensed use or other types of intellectual property matters or lawsuits.

Each country/region has its own rules regarding the requirements or prohibitions for trademark registration. Trademark registrations generally last for 10 years and are renewable for an indefinite period.

Approximately 125 countries (now including the UAE) are signatories to the Madrid Protocol, making TMs registered in those countries eligible for registration in other signatory countries under a single application.

If you need information on how to register a trademark, reach out to us and we would be happy to connect you to an IP firm.

Terms of Service (sometimes called “User Terms and Conditions” or “Terms of Use”) is the contract governing the relation...
12/07/2022

Terms of Service (sometimes called “User Terms and Conditions” or “Terms of Use”) is the contract governing the relationship between the online service provider and the website users.

The Terms of Service (TOS) lay out the conditions of use of the website. This includes the binding nature of terms and putting the responsibility of reviewing the TOS for any updates on the user. Any user account registration requirements, reasons for cancellation or suspension of the user account and rules regarding any interaction with other users should be made part of the TOS. If there are conditions specific to the service being offered or goods being sold and payment terms, they should be included as well. Disclaimers regarding links to third-party websites, disclaimer of warranties, limitation of liability and intellectual property rights (of both the online service provider and any relevant third parties) are also important.

Eid Al Adha Mubarak! May your holiday be full of joy and the laughter of loved ones.
08/07/2022

Eid Al Adha Mubarak! May your holiday be full of joy and the laughter of loved ones.

A term sheet is a (usually) non-binding agreement that describes the basic terms and conditions of an investment in a st...
05/07/2022

A term sheet is a (usually) non-binding agreement that describes the basic terms and conditions of an investment in a startup. Once the parties agree to the terms, the term sheet will be used as a template to draft the binding legal document(s).

Many investors conduct basic due diligence on the company, share the term sheet and then do additional due diligence before finalizing the legal documentation. However, some may do all of the due diligence upfront, and some may do very little at all.

The points that are usually included in the term sheet are:

• company valuation
• investment amount
• investor commitment
• ownership percentages
• voting rights
• liquidation preference
• anti-dilution rights
• board seats

Startups going through the fundraising process should involve experienced legal counsel, to avoid getting a bad deal.

Has your company been through a fundraising round? What advice can you give others about term sheets?

In the UAE, in addition to the Ministry of Human Resources & Emiratisation employment contract (or free zone contract, i...
28/06/2022

In the UAE, in addition to the Ministry of Human Resources & Emiratisation employment contract (or free zone contract, if a free zone company), most companies also have their own internal employment agreement. For those that do, the agreement should include, at minimum, the points included in this post.

Further details about these points will be the topic of future posts.

Does your employment agreement cover these matters? Feel free to contact us if you need a new internal employment agreement.

As defined in our Intellectual Property: A Primer post, a patent is “An exclusive right granted for an invention, which ...
21/06/2022

As defined in our Intellectual Property: A Primer post, a patent is “An exclusive right granted for an invention, which is usually a product or process with special features that are innovative and provide a technical solution to a problem”.

Patent protection means that the invention cannot be commercially made, used, distributed, imported or sold by others without the patent owner's consent.

Note that in many countries, scientific theories, aesthetic creations, mathematical methods, plant or animal varieties, discoveries of natural substances, commercial methods, methods for medical treatment (as opposed to medical products) or computer programs are generally not patentable.

If you need information on how to get a patent issued, reach out to us and we would be happy to connect you to an IP firm.

Terms of Service (sometimes called “User Terms and Conditions” or “Terms of Use”) is the contract governing the relation...
14/06/2022

Terms of Service (sometimes called “User Terms and Conditions” or “Terms of Use”) is the contract governing the relationship between the online service provider and the website users.

The Privacy Policy is a legal document that discloses how a website collects, processes, stores, shares and protects personal data, the purpose(s) behind it and the rights of the user regarding personal data.

The Return and Refund Policy deals with the return of goods and refund of money. Some purely service-based businesses may have a Refund/No Refund Policy.

The Disclaimer addresses a specific liability issue, which may fall outside of the scope of the Terms of Use.

The specifics of these website T&Cs will be addressed in future posts.

Do you have these on your website? Do you need new T&Cs? Do you want your current ones reviewed? Reach out to us to discuss.

Having recently taken a very unscientific poll of a small sample of entrepreneurs who consider their businesses to be st...
07/06/2022

Having recently taken a very unscientific poll of a small sample of entrepreneurs who consider their businesses to be startups and who believe that they need or want to fundraise in the future, it became clear that many do not know the basics of the fundraising process.

Of course, the exact process, order, timelines and how deep investors will dig into the company depends on the type of fundraising, the type of investor, the amount of the investment and other factors.

For example, some investors conduct basic due diligence on the company, share the Term Sheet and then do additional due diligence. Some may do all the due diligence upfront and then share the Term Sheet. And some may conduct very little due diligence.

What is a Term Sheet? What does due diligence involve? Which legal documents are we signing? Worry not, friends, more details to follow in future posts.

Are you considering raising funds for your company? Has your company fundraised? Share your experience on the process below.

While an HR policy by itself does not create a great company culture, having a clear one helps to set the right tone whe...
31/05/2022

While an HR policy by itself does not create a great company culture, having a clear one helps to set the right tone where both management and employees are aware of their rights and obligations.

Although the new UAE Labour Law only requires companies with 50+ employees to have a policy that includes the points listed in this post, it is good practice for smaller companies to have one in place as well.

One example of this is with terminations. Even though the law does not require a termination process policy for companies with less than 50 employees, the law does require an investigation and at least two written warnings. To ensure that smaller companies comply with the law, the termination procedures should be in writing.

In addition, since there are now anti-discrimination and harassment provisions in the law, it is highly recommended that all companies adopt policies addressing these issues.

Once drafted, the policy should be shared with the employees in a language they understand.

Does your company have an HR policy? Will it be adopting one?

Intellectual property (IP) is an important topic for businesses, especially for companies where the main asset is the IP...
24/05/2022

Intellectual property (IP) is an important topic for businesses, especially for companies where the main asset is the IP.

In this primer, the most common types of IP are identified and defined. In future posts, we will be providing more information on each type of IP, including any requirements, how rights vest and registration.

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