Legal aspects of structuring a start-up

Case 1: Consulting for the foundation of a start-up company

1. facts of the case

X (living in Freiburg im Breisgau, Germany) and Y (living in Zurich, Switzerland, together with X "founder") know each other since they were students together and now want to found a start-up "Playfun" together. X and Y both have small children of different ages and have often been upset about the fact that their children no longer find toys interesting after a certain period of time, as the children continue to develop and each want to have age-appropriate toys available that are new, exciting and challenging. Therefore, the idea of "Playfun" was born during a dinner together. Playfun is intended to enable parents to obtain sustainable and age-appropriate toys of the best quality on a rental subscription basis. The two founders each want to have equal say and only be able to represent the startup together.

The two founders will come to you and would like advice on this.

Questions

• What legal forms are available to X and Y? What needs to be taken into account?
• Is "Playfun" a good company name?
• How can founders best protect their logo?
• Based on the information disclosed in the facts, are there any other potential issues to consider?

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Case 2: The acquired GmbH

1. facts of the case

A and B ("founders") have a start-up together, which has meanwhile just exceeded the profitability threshold, whereby the founders do not pay themselves a salary. Until now, they have not been legally advised and have financed the start-up themselves through loans. Now they are planning to raise capital from investors for the next stage of growth and would like to convert their GmbH into an AG.

In a first conversation it turns out that the founders operate under the company XY GmbH. XY GmbH was founded by A's husband ("E") with a share capital of CHF 20,000 and then "repurposed" by the founders.

Although the founders have a simple contractual agreement that they should both hold half of the shares in the company and be managing directors - the ordinary shares were neither transferred from E to the founders, nor were A and B ever elected by E as managing directors and/or entered in the commercial register.

Questions

• How do you recommend the founders proceed so that both of them have a stake in their company (an AG)?
• The founders would also like to regulate their rights as shareholders. How can this be done? What should they regulate?
• What do you recommend to the two founders with regard to the upcoming financing round?

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Case 3: Preparing for a cyber attack

1. facts of the case

The Swiss start-up PayPay is a payroll provider that already has a broad customer base with various Swiss SMEs. PayPay offers them a platform that enables dynamic time tracking management, expense accounting, payroll, employee data management and much more.

CEOs and CFOs have read with concern about the increasing cyberattacks in Switzerland and are considering how to deal with them. This is also against the backdrop of the totally revised and stricter data protection law coming into force on September 1, 2023.

CEO and CFO come to you and would like advice on this.

Questions

• How to deal with cyber attacks according to the new data protection law?
• What would PayPay have to do if, for example, employee data of their customers got into the hands of hackers?
• What are the most important To Dos according to data protection law?

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Case 4: The first employees

1. facts of the case

Two EPFL students have jointly developed an online booking platform for online appointment bookings and video consultations in the healthcare sector and distribute it under the company Booky AG. Now they want to scale their company and hire three employees (sales, finance and another software engineer).

Since the start-up is only making small profits, the founders cannot yet offer an attractive and/or marketable salary. They are considering offering the applicants shares in addition to a salary.

Questions

• Do I need a written employment contract? What should an employment contract contain?
• Legal consequences of such a combination of salary with shares?
• Other recommendations when hiring employees?

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