Startup Estonia and nine law firms in Estonia have created a set of free model legal documents to make life easier for the country’s startups.
The package includes 22 documents and forms, most needed for startups and investors.
The startup community development manager at Startup Estonia, Liisi Org, said in a statement that although starting a company in Estonia is easy, founders do struggle with formalising contracts and documents, with legal advice being a substantial extra cost for starting founders. “In cooperation with law firms, we are offering a set of model documents for startups and their investors, compiled by law firms dealing with startups using best practices,” Org said.
“When starting a company, it is important to sign a founders agreement to determine the roles of the founders, how much of the company each founder owns, and what happens if a founder departs the company. The Articles of Association regulate how important decisions are made and how the shares can be sold. Every investment in a startup starts with a term sheet and ends with an investment agreement,” Startup Estonia mentioned as examples where the free legal support comes handy.
“Startup Estonia’s package includes term sheets and final investment documents both for convertible loans and equity investments in the seed round. Every startup must maintain a cap table showing the ownership percentage of each shareholder and option holder. As the company grows, it signs employment agreements and option agreements with its employees. [Intellectual property] assignment agreements guarantee that all the IP created for the company remains with the company and non-disclosure agreements protect the company’s trade secrets.”
The documents were drafted by Estonian law firms Ellex Raidla, Cobalt, Eversheds Sutherland, Hedman Partners, TGS Baltic, Sorainen, Fort Legal, Triniti and Njord.
Cover: Startuppers at an Estonian hackathon. Photo by Renee Altrov.