By Omoruyi Edoigiawerie, Esq
One of the most important things a start-up needs is a proper documentation. This is essential to creating a solid foundation upon which the start-up can grow and scale in the long run. Like I often say, if you get your documentation wrong, the company would not just fail, but even more, would be steeped in disputes, debt, and conflict- most of which could be avoided.

Let us now review some of the essential documents that start-ups need especially in their formative years.

1. Confidentiality and non-disclosure agreement

As a start-up grows and provides services to its clients, a standard confidentiality and non-disclosure agreement template are essential. This can be used to enter into preliminary discussions with third-party vendors, consultants, and contractors amongst others. It is also important to ensure appropriate protection is provided to the start-up and its ideas.

Simply put, a non-disclosure agreement (“NDA”) is an agreement in which one party agrees to provide access to its confidential information to a second party about its business or products and the second party agrees not to share this information with anyone else for a specified time. Some important clauses in NDA’s include:

• Definition of ‘confidential information and exclusions thereof;
• The term, if any, for keeping the information confidential.
• Provisions regarding obligations on the use/disclosure of confidential information
• Use of information only for restricted purposes;
• Disclosure of information only to persons on a need-to-know basis;
• Adherence to a standard of care relating to confidential information;
• Ensuring that anyone to whom the information is disclosed further abides by the recipient’s obligations.

2. Offer Letter/ Employment Agreements

Under Nigerian Law, employers must issue offer letters to employees at the time of appointment or within three months of employment. This document outlines the terms and conditions of employment including the probationary period, remuneration, and other documents required to be produced at the time of joining. While many employers stop at this stage, it is recommended that employers execute employment contracts in addition to the offer letters.

While drafting the offer letter and employment agreements and determining the terms and conditions of employment, it is critical to ensure that all applicable employment laws are being complied with.

Although there is no prescribed format for an employment contract, some of the important clauses in such contracts include:
• Term of employment and termination of employment (including as a result of misconduct);
• Compensation structure – remuneration and bonuses;
• Duties and responsibilities of the employee;
• Confidentiality and non-disclosure;
• Intellectual property and assignment;
• Non-compete and non-solicitation obligations; and
• Dispute resolution.

3. Human Resource Policy / Employee Handbook

It is recommended that all employers clearly set out the various policies and procedures applicable to employees and circulate such policies to employees periodically.
The general provisions incorporated in an employee handbook include (but are not limited to):

• Employee benefits;
• Leave policies include paid leave, casual leave, sick leave, and maternity leave amongst others;
• Compensation policies;
• Code of conduct and behavior policies;
• Anti-discrimination and sexual harassment policies;
• Immigration law policies;
• Complaint procedures and resolution of internal disputes;
• Internet, email, and computer use policies;
• Conflict of interest policy;
• Anti-drugs, smoking, and alcohol policy;
• Accident and emergency policies;
• Travel and expense policy;
• A prohibition from insider trading

4. Employee Stock Option Plans (ESOPs)

Employee stock option plans (“ESOPs”) are designed to give an employee stock in the employer company. They may be granted either after completion of certain years of employment or may vest immediately upon joining. To recruit and retain top performers, the company could use ESOPs as incentives for its potential employees by offering stock options to them. This is a popular strategy with companies that cannot afford to provide large pay packages to attract the right level of employees.
ESOPs are generally executed through an ESOP plan document that specifies the scope, extent, and manner in which the ESOPs will be granted to an employee. This is accompanied by a “grant letter” which is a quasi-agreement entered into with the relevant employee which more specifically outlines the terms of the grant, vesting, and exercise.

An ESOP is a right but not an obligation of an employee to apply for the shares in the company in the future at a predetermined price. These options may be converted into shares upon fulfilment of certain conditions. These conditions could be performance-based or time-based and must be in line with the statutory and regulatory regulations.

5. Other Agreements
The start-up to conduct its activities will have to deal with various other players in the market, which fulfil the requirements as to raw material, advertisement, or selling of the product. Accordingly, to deal with them as clients, suppliers, or partners, the start-up has to enter into certain agreements with them specifying the standard, which has to be met by both the start-up and the other parties to conduct the business.

So as the start-up conducts business, it requires drafting or review of various agreements which it enters into with the other parties. These would often involve standard form agreements including those used by the start-up and those used by third parties it deals with. It would also involve more aggressively negotiated agreements such as investment contracts and large supplier or customer contracts. These agreements are often structured differently. For instance, a start-up may enter into numerous contracts with a customer for each assignment or may choose to have a master agreement setting out the essential terms and have assignments and their corresponding payments set out in statements-of-work under such a master agreement.

• These would include agreements such as:

a) Software License Agreement
Licenses to use the software necessary in the conduct of business. These can be as simple as operating systems.

b) Software Development/Services

Agreement: Entered into by software companies when providing services to their clients. These usually cover the scope of services and the payment of consideration.

c) Assignment Agreement (Work for Hire Agreement)

Contracts for work done, especially concerning the software. These are often tailored to ensure that the intellectual property created is retained by the hiring party rather than the creator of such intellectual property.

d) Equipment/Technology Lease

Permits a party that leases equipment or technology to use the leased equipment or technology for a limited period.

e) Online Agreements

These protect a company from misuse of its web-based resources. They often take the form of clickwrap agreements. These often take the form of disclaimers that are designed to minimize the company’s liability for misuse.

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f) Strategic Alliance Agreements

Technology Transfer, Co-Marketing, Pre- Development, and Co-Development agreements.

Omoruyi Edoigiawerie is the Founder and Lead Partner at Edoigiawerie & Company LP, a full-service law firm offering bespoke legal services with a focus on start-ups, established businesses, and upscale private clients in Nigeria. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. His firm can be reached by email at [email protected]

g) Outsourcing Agreements

These often involve one ‘master services agreement’ entered into with the client followed by ‘statements of work’ specifying the scope of work and the consideration for that task.

h) Customer Contracts

Agreements entered into with customers. These usually lay out the terms of supply by the company and the terms of payment by the customer. The company may choose to use standard form agreements for smaller customers while larger customers may have negotiated terms.

i) Vendor/ Supplier Contracts

Companies usually have raw materials of various natures supplied to them for them to add value in whatever manner. The supply of such raw materials is essential to carrying on the intended business activity and the terms of such supply and payment by the company should be laid out as clearly as possible in an agreement.

j) Contractor Agreements

A company may use contractors to perform various ancillary functions. These may include construction and architecture, design, housekeeping, security, and transport amongst others.

k) Leases

A start-up would usually lease the property in which it houses its offices or guest quarters or other real estate investments. These property leases need careful drafting and negotiation to ensure utmost clarity.

These agreements are not exhaustive but provide an inroad to the documentation needs of the company. It is my expert advice that start-ups take their documentation seriously by having this documentation in place.

Omoruyi Edoigiawerie is the Founder and Lead Partner at Edoigiawerie & Company LP, a full-service law firm offering bespoke legal services with a focus on start-ups, established businesses, and upscale private clients in Nigeria. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. His firm can be reached by email at [email protected]