IT businesses grow fast, but their paperwork often lags behind: the team works as sole proprietors (FOP), rights to the code are not recorded anywhere, and the founders’ shares were agreed “verbally”. While the company is small, this goes almost unnoticed. Problems arise when an investor arrives, a key developer leaves or a major client asks for confirmation that the product really belongs to the company.
We help product and outsourcing companies and start-ups put their development rights, team contracts and corporate structure in order. We explain the risks in plain language and propose a solution that fits the business’s stage of development rather than a template from the internet.
Typical legal issues
Code rights have not passed to the company
If the contract with an FOP developer contains no clear clause on the transfer of economic (property) rights and no acceptance certificates were signed, the rights to the code may remain with the author. This is often discovered only during an investor’s due diligence.
Reclassification of FOP contracts
An FOP contract that in fact describes an employment relationship (working hours, subordination, holidays) may be recognised as an employment contract — with tax consequences for the company.
Options without a legal basis
Promises of a share “in the future” without an option plan and corporate documents lead to disputes with the team and hinder fundraising.
Founder conflict
Without a shareholders’ agreement, it is unclear what happens to a share if a co-founder leaves the project, stops working or wants to sell their share to outsiders.
Users’ personal data
Products that serve users in the EU must comply with the GDPR. A lack of policies and data processing agreements creates a risk of claims from clients and regulators.
How we help
- We draft contracts with developers and contractors that include clauses on the transfer of code rights and confidentiality.
- We audit existing FOP contracts and suggest how to reduce the risk of their reclassification.
- We design option plans and documents for the team.
- We prepare shareholders’ agreements between founders and amendments to the charter.
- We support fundraising and preparation for due diligence.
- We draft licence agreements, client contracts (SaaS, custom development) and NDAs.
- We draft privacy policies and personal data documentation.
Frequently asked questions
Do code rights pass to the company automatically?
Not always. For FOP developers, the transfer of economic rights must be expressly provided for in the contract and, as a rule, confirmed by acceptance certificates. Separate rules apply to employees under employment contracts, but these should also be recorded in documents. The most reliable approach is to review the existing contracts and, if necessary, sign supplementary agreements.
Can we work with a team of FOPs without risk?
It is impossible to eliminate the risks entirely, but they can be reduced significantly: by describing the subject of the contract, the acceptance procedure and the parties’ liability correctly, without copying employment terms. What suits your company is determined after analysing your working model.
When should employee options be set up?
Usually before or at the same time as fundraising, so that the investor sees a clear capital structure. The specific model depends on where the company is registered and how it plans to develop.