Agreements with shareholders. Trademark and employee regulation. Taxes and so many other things. It’s common knowledge that building a startup is hard. Finding customers, building the right team, obtaining funding, the list goes on and on. But one of the challenges that startups in Sri Lanka face that not spoke of about often is the legal essentials. This is what elawyers.lk hoped to address with one of their most recent workshops.
Kicking things off was Dinushka Medagoda – Founder of elawyers.lk. He began by describing the different types of businesses that can be registered. Afterward, he went onto explain what exactly a shareholders agreement is. In a nutshell, this is a legal contract that defines the relationships between the shareholders of a company.
One of the first things the shareholder’s agreement would cover the issue and transfer of shares. But how does one set the price for shares with regards to this? It has to be set at a price, which will not make future shareholders feel cheated. And it has to be done by the Board of Directors of a company. Additionally, the shareholder’s agreement must also prevent dilution and loss of control.
Dinushka then went onto explain the concept of reserved matters. These are specific matters defined in the shareholder’s agreement, that all shareholders must agree on before a decision can be approved. When drafting the agreement, Dinushka pointed out that founders should very attentive as to what these matters are.
This is because reserved matters offer avenues for founders to protect their vision for the company. And if that vision involves an exit down the road, then the shareholder’s agreement should address it. Furthermore, when it comes to arbitration to solve disputes, it should be expressly mentioned, which country’s laws apply.
Having listed other important clauses a shareholders agreement should cover, Dinushka gave everyone attending an important reminder. “Friends can do verbal agreements. But it’s very critical to have written agreements,” he said. This is why documents such as shareholders agreements are essential for any startup.
Following an introduction to shareholders agreements, we saw Kalana Kotelawala – Senior Legal Consultant at the National Intellectual Property Office. He opened by defining that a trademark is a distinctive identifier of goods and services by a business. It is what’s used to distinguish the products from a company from that of its competitors.
In Sri Lanka, trademarks once registered will need to be renewed every 10 years. However, from the date an application is submitted, it can take 5 years for the trademark to be granted. And it’s essential that the trademark is unique. This means you shouldn’t have a trademark that references historic figures. Similarly, you can’t use globally known trademarks, even if they’re not registered in Sri Lanka.
Kalana also added that your trademarks should be transferable to other forms of media. It should also ideally be short and have a visual impact. He also mentioned that a startup should not to use trademarks that have only made minor alterations to known trademarks. While this can be appealed, it’s still very likely that a startup that does so will face a lawsuit.
Afterward, we saw Damitha Karunaratna – a member of elawyers.lk share what a startup should know in terms of labor laws. He opened by sharing that the labor laws in Sri Lanka strongly lean toward employees. In fact, the labor courts of Sri Lanka have the power to read beyond what’s stated in an employment contract.
As such, it’s imperative that employers are knowledgeable when it comes to the law. This is because if employers are required to attend court, then they must show well-documented proof to make their case. Thus, Damitha told the attendees, “Don’t employ people purely for the sake of employing them.” Having explained this, he listed some basic rights of employees as per the law.
These rights include being paid for EPF & ETF for temporary workers, interns, apprentices, and trainees. Damitha stated that there’s no minimum number of employees required for a company to pay EPF & ETF to its employees. The only exceptions are in the cases of family businesses for spouses and children. However, siblings are still entitled to it.
Damitha concluded his session by covering termination. He mentioned that this should be a last resort for any employer. And while there are no legal requirements, it’s best for employers to hold an inquiry prior to taking such actions. This he said so reminding the audience that the labor courts are powerful and the laws are structured in a way that favors employees.
The final speaker at the elawyers.lk workshop was Sivagurunathan Veerappan – Principal Consultant at Consultants Consortium. He opened his session by listing the different taxes a company has to pay. Afterward, he delved into some of the taxes to explain them in more detail. These first of these was income tax, which employers have to pay on behalf of their employees on a quarterly basis.
Afterward, Sivagurunathan explained the Withholding Tax. This is an upfront payment of income tax by the recipient at the time he receives his income. Having explained these taxes, he explained the process a business could go through in order to appeal any potential tax penalties or offenses.
That being said he encouraged businesses and startups to avoid going through this process. He concluded his session by explaining how the VAT and NBT taxes were calculated and applied. And with that, the elawyers.lk legal essentials workshop for startups came to an end.
Subscribe to our mailing list and get interesting stuff and updates to your email inbox.
Venture Frontier Lanka is bringing experts in entrepreneurship from around the country to cities throughout Sri Lanka to train local entrepreneurs to think differently about the ventures they will start.
Venture Frontier Lanka is bringing experts in entrepreneurship from around the country to cities throughout Sri Lanka to train local entrepreneurs to think differently about the ventures they will start. A caravan stop consists of different sessions about creating unique ideas for startup ventures and strategies for financing those ideas.
Come join the sessions on the 19th of December, starting with 2 pm at Sri Lanka Institute of Information Technology.
The event is free of charge! REGISTRATION is mandatory for this event
(Wednesday) 2:00 pm - 6:00 pm
SLIIT, New Kandy Road, Malabe
Early Bird till the 16th of Dec: 20% discount Likuid Members: 20% discount Female/Social Entrepreneurs (Locals Only): 50% discount Join for a one day workshop where we unchain the collective wisdom and creativity
Early Bird till the 16th of Dec: 20% discount
Likuid Members: 20% discount
Female/Social Entrepreneurs (Locals Only): 50% discount
Join for a one day workshop where we unchain the collective wisdom and creativity to help each other having a more productive digital nomad new year and build better cooperations for teamwork.
During this peer to peer learning session you can share your experiences to help others and learn from other practitioners. Together, dive into the most painful problems and brainstorm on solutions. It’s for you if you resonate with some of these questions:
How do I integrate work, life and travel?
How do I keep motivated to achieve?
How do I keep engaged with a client?
How do I manage my time and energy?
How do I get clients?
How do I find people to collaborate with?
How to deal with time differences?
How can I make human interactions with slack profiles?
How to set realistic goals in constantly changing environment?
What are the best tools & methods for productivity?
What’s the secret of aligned teams?
What are the best skills for a digital nomad?
ABOUT THE METHOD:
“We create space for meaningful conversations, experimental and peer to peer learning. Nothing frontal, no preaching. But space for your very unique questions.”
+ Full-day mentored learning program
+ Breakfast on the roof
+ BBQ lunch on the roof
+ Goodie bags & Take-home handbooks
+ Post-event networking
ABOUT THE HOST:
Kitti is a digital nomad herself and a marketing consultant for innovative companies and early stage startups. She is a conversation ambassador for tedxdanubia, hosted meaningful conversations on ideas worth spreading. In the past years she worked in self organized teams, practiced facilitation, joined peer to peer networks, decentralized teams and cocreated a collective of freelancers. She is a cofounder of a sustainability startup that just secured its first round of investment. Worked as a mentor for many startups, and in the meantime she visited more than 15 countries.
Are you a Sri Lankan female entrepreneur or a local social business? Reach out for your discounted tickets!
PRICE IN SRI LANKAN RUPEES:
Regular: LKR 5000
Early Bird till 16th of Dec: LKR 4000
Likuid Members: LKR 4000
Female/Social Entrepreneurs (Locals Only): LKR 2500
(Saturday) 8:30 am - 5:30 pm
5 Charles Place 00300 Colombo, Sri Lanka
Karthik ( Associate Director, DTCC & Co-organiser of Hyperledger Chennai Meetup) will be here for the 2nd Hyperledger meetup. He will share his experience with Hyperledger and Business application of Blockchain
Karthik ( Associate Director, DTCC & Co-organiser of Hyperledger Chennai Meetup) will be here for the 2nd Hyperledger meetup.
He will share his experience with Hyperledger and Business application of Blockchain technologies.
1. Work with Hyperledger Fabric and Explorer.
2. Business use case with Hyperledger Blockchain Framework
3. Q&A session
This is a Free session. Register here
(Friday) 5:30 pm - 8:30 pm
Startup X Foundry
07, Charles Place, Colombo 03, Colombo
Subscribe to our mailing list and get interesting stuff and updates to your email inbox.