A start-up without pitfalls: how to secure your legal position from the outset.

Start-ups serve as a catalyst for innovation, investment, and economic transformation. Data from Poland demonstrates that this sector benefits from substantial financial and systemic support, and its development has a direct impact on the competitiveness of the entire economy. The growing significance of technology – particularly AI – means that start-ups are becoming not merely an important, but a strategic component of the economic ecosystem.  

In the process of launching a start-up, considerable emphasis is typically placed on speed of execution, product development, and the acquisition of initial customers. At this early stage, formal and legal matters are often deprioritized and treated as issues to be addressed at a later time.

However, from the perspective of commercial practice, it is evident that the initial phase of establishing a venture is precisely the moment when fundamental legal matters should be properly structured. These arrangements have a decisive impact on the future rights and obligations of the founding shareholders, as well as on the principles and framework governing their cooperation.

The primary document regulating the basic rights and obligations of shareholders is, of course, the articles of association. This document defines, in particular, the allocation of shares among shareholders, participation in profits (and losses), the organizational structure, the scope of business activity, and the fundamental powers of the company’s governing bodies.

However, already at the stage of drafting the articles of association, it is advisable to consider entering into a separate shareholders’ agreement. Such agreements are not specifically regulated under Polish law; therefore, the principle of freedom of contract applies. Consequently, the agreement should be structured in a manner that ensures compliance with applicable law, principles of social coexistence, and other relevant legal standards.

Within a shareholders’ agreement, the parties may regulate in a detailed and precise manner the mechanisms for protecting their investments and safeguarding their contributions, as well as their current and future obligations and rules of cooperation, including in particular:

• restrictions on the transfer of shares (lock-up provisions);
• anti-dilution mechanisms;
• drag-along rights (the right to compel other shareholders to sell their shares);
• tag-along rights (the right to require the acquisition of shares held by specific shareholders);
• obligations of personal involvement of shareholders in the business;
• obligations and schedules for making capital contributions;
• non-compete obligations;
• dispute resolution mechanisms;
• methods of securing the proper performance of obligations by individual shareholders.

  Many issues that arise at later stages of a start-up’s development – such as during the entry of an investor or rapid scaling of operations – originate from the fact that certain matters were left unaddressed or regulated only in very general terms at the outset.  

  This does not concern solely relations between shareholders. As the project develops, negotiations with investors, contracts with contractors, and other legal arrangements inevitably emerge. Clear and well-considered rules of cooperation help mitigate risks that might otherwise materialize only when the stakes of the venture have significantly increased.

At every stage – from the initial concept, through the drafting of the articles of association and shareholders’ agreement, to negotiations with investors and the conclusion of contracts with contractors – specific legal risks arise that should be consciously identified and managed.

In commercial practice, one observation is frequently repeated: problems that can be avoided at the beginning can, at a later stage, typically only be mitigated, rather than entirely eliminated.