By Team Neeraj Associates, Lucknow · Last reviewed: November 2026 · 7 min read
हिंदी में पढ़ें: टेक और मैन्युफ़ैक्चरिंग स्टार्टअप की कानूनी नींव — हिंदी गाइड
Quick answer: A technology or manufacturing startup in India usually needs six legal building blocks: (1) incorporation as a private limited company under the Companies Act, 2013; (2) a Memorandum and Articles of Association that fit the business; (3) a Founders' Agreement and, once outsiders come in, a Shareholders' Agreement; (4) NDAs and IP assignments, with trademark, patent and design filings; (5) investor and commercial contracts; and (6) ongoing corporate governance and compliance. Getting these right at the start is far cheaper than fixing them after a dispute or an investor's due diligence.
1. Incorporating a private limited company
A private limited company is the usual choice for startups that want to raise investment. Key points under the Companies Act, 2013:
- Minimum two directors and two shareholders (the same persons can be both). At least one director must have stayed in India for 182 days or more in the previous calendar year (Section 149(3)).
- One combined online filing (SPICe+) on the MCA portal covers name reservation, incorporation, DIN, PAN, TAN and some registrations. Each director needs a Digital Signature Certificate (DSC).
- Choose the name carefully. Run a trademark search too. A name that the Registrar accepts can still infringe someone's registered trademark.
- After incorporation:
- Declare commencement of business within 180 days, after shareholders pay for their shares (Section 10A).
- Hold the first board meeting within 30 days (Section 173).
- Appoint the first auditor within 30 days (Section 139(6)).
- Issue share certificates within 60 days (Section 56(4)).
- Set up statutory registers.
2. Memorandum and Articles of Association (MOA and AOA)
- MOA (Section 4) states the company's name, registered-office state and objects. For a technology-plus-manufacturing business, draft the objects clause wide enough to cover research, engineering, manufacturing, trading and services, so that later activities are not outside the company's objects.
- AOA (Section 5) contains the internal rules: board powers, share transfers, quorum and meetings. Default model articles rarely suit a founder-led company. Rights agreed with investors, such as pre-emption, reserved matters and board seats, must be written into the AOA as well, because a shareholders' agreement that conflicts with the AOA can be hard to enforce against the company.
3. Founders' Agreement and Shareholders' Agreement
A Founders' Agreement is signed between the co-founders, ideally before or at incorporation. It should cover:
- roles, time commitment and decision-making
- the equity split and vesting (for example over four years with a one-year cliff), so that a founder who leaves early does not walk away with a large stake
- assignment to the company of all IP created by the founders, including work done before incorporation
- what happens on a founder's exit: buy-back, good leaver and bad leaver terms
- deadlock resolution and dispute resolution (arbitration is common)
A Shareholders' Agreement (SHA) is signed when investors or other shareholders come in. It usually covers board composition, reserved matters needing investor consent, anti-dilution, pre-emption, right of first refusal, tag-along and drag-along rights, information rights and exit.
Keep in mind that under Section 27 of the Indian Contract Act, 1872, a covenant that restrains someone from carrying on a lawful trade after the relationship ends is generally void. Non-compete clauses that operate after exit should therefore be drafted narrowly, with confidentiality and non-solicitation doing most of the work. SHAs and similar documents also attract stamp duty, which depends on the state.
4. NDAs and intellectual property protection
For an engineering business, IP is often the main asset.
- NDAs with vendors, contract manufacturers, consultants and prospective investors, before drawings or technical data are shared.
- IP assignment clauses in every employment and consultancy agreement, so that designs, code and inventions belong to the company.
- Trademark: file for the brand name and logo under the Trade Marks Act, 1999, in the classes that match the products and services.
- Patent: under the Patents Act, 1970, an invention must be new, involve an inventive step and be capable of industrial application. A provisional specification can be filed early to secure the date. The complete specification must follow within 12 months. Avoid public disclosure before filing, because it can destroy novelty.
- Design: the shape or appearance of a product can be registered under the Designs Act, 2000.
- Copyright protects software code and technical documents. Registration is optional but useful as evidence.
5. Investor and business agreements
- Investment documents: term sheet, share subscription agreement, SHA, and convertible instruments where used. Share issues must follow the Companies Act procedure (for example, private placement rules), and foreign investment must follow FEMA reporting.
- Commercial contracts: vendor and supply agreements, contract manufacturing, distribution, service and licensing agreements. Pay attention to specifications, quality and inspection, warranties, liability caps, IP ownership, confidentiality and termination.
6. Corporate governance and ongoing compliance
- Board and shareholder meetings, minutes and resolutions.
- Annual filings with the Registrar of Companies (financial statements and annual return), along with the statutory audit.
- GST registration, and MSME (Udyam) registration, which can help with delayed-payment protection under the MSMED Act, 2006.
- Startup India (DPIIT) recognition, available to eligible entities within ten years of incorporation and below the turnover limit, for certain tax and compliance benefits.
- For manufacturing:
- Consent to Establish and Consent to Operate from the State Pollution Control Board, under the Water Act, 1974 and the Air Act, 1981.
- Factory registration and licence, fire safety approvals and labour law registrations.
- Any product-specific licences or standards (for example BIS) that apply to the product.
Practical checklist for founders
- Agree the founders' equity, roles and vesting in writing before incorporation.
- Clear the brand name through a trademark search and file the application early.
- Incorporate, then finish the post-incorporation steps within the deadlines.
- Put NDAs and IP assignments in place before sharing designs with anyone.
- File patent and design applications before public launch or demonstrations.
- Align the AOA with any SHA before an investment closes.
- Keep a compliance calendar for ROC, GST, labour and environmental filings.
Frequently asked questions
How many people are needed to start a private limited company?
At least two directors and two shareholders. The same two people can hold both positions, and at least one director must be resident in India.
Is a Founders' Agreement legally required?
No, but it is strongly advisable. Without one, disputes over equity, roles or IP ownership are hard to resolve, and investors usually ask for these issues to be settled in writing.
What is the difference between a Founders' Agreement and a Shareholders' Agreement?
A Founders' Agreement governs the relationship between co-founders. A Shareholders' Agreement governs the rights of all shareholders, including investors, and is usually signed when outside capital comes in.
When should a startup file a patent?
Before any public disclosure of the invention. A provisional application can be filed early to secure the date, followed by the complete specification within 12 months.
Is a post-exit non-compete clause enforceable in India?
Generally not, because Section 27 of the Indian Contract Act, 1872 makes agreements in restraint of trade void, subject to limited exceptions. Confidentiality and non-solicitation clauses are more dependable.
Can these legal services be handled remotely?
Most of the work, including incorporation filings, drafting and digital signing, can be done online. A physical step is needed only where a law or authority requires it.
About the authors
Team Neeraj Associates, Lucknow Email: rishi.saxena@neerajassociates-legal.com · Phone: +91 8960006363
Questions on this guide? If you have a question about the law discussed here, write to rishi.saxena@neerajassociates-legal.com. Selected questions will be answered in future updates of this guide. We do not advise on individual matters through this website.
Disclaimer: This article is general information as of November 2026, not legal advice. Laws, thresholds and procedures change, and every business is different. Please consult an advocate about your situation.
Disclaimer: This article is general information about Indian law and is not legal advice. Laws, rules and court rulings change, and your situation may differ. Please consult an advocate before acting.