As your firm starts operations you will need to hire people, host your site, license content and strike alliances. Follow this checklist

Once you have formed the company and arranged for the capital, you will then need to hire. You will also have to deal with vendors and have alliances. We look at legal aspects of these issues.

Employment agreement: An Employment agreement should set out the terms and conditions on the basis of which the employee has been taken into employment. This is especially important in a field like e-commerce where there is high mobility of employees. Typically, it should include clauses for non-disclosure, intellectual property rights, non-compete as well as compliance with the company's policies. It would also more specifically include any form of Sweat equity granted to the employee/director. The Company may want to develop an Employee Stock Option Plan (ESOP). This area would not be complete without a brief mention of what an ESOP is.

Employee stock option scheme

An employee stock option scheme is the right but not the obligation of an employee to apply for shares of a company in the future at a predetermined price. The holder may convert stock option into shares on fulfillment of certain conditions. These conditions maybe time based or performance based. All Employee Stock Option Schemes in listed companies have to be in keeping with the Guidelines issued by Securities Exchange Board of India (SEBI) in June 1999.

Operational agreements

(a) Hosting agreements.

The first agreement will be by way of the type of service the Internet Service Provider (ISP) is providing.The ISP may host websites for companies whereby the ISP gives the company "server space" so that that the companies websites may be connected to the Internet.

In this case the company will have to enter into a Web Hosting Agreement, whereby among other things the ISP agrees to provide server space access to the company at all times.

A web hosting agreement should further include terms pertaining to maintenance, ownership of content and the Intellectual property rights therein as well as who would be responsible for updating content placed on the website.

The company generally gives the ISP all content, IPR etc as maybe required for the provision of these services.

(b) Website development agreement

The Technical Services/Website Development Agreement maybe either with the ISP or a third party called the technical service provider. A technical service provider may provide other services, such as the designing and development of the website, software application or facilities specifically tailored to the website as well as ensure that user's have immediate and quick access to the website.

(c) Agreement with alliance partners

If your site is tied up with other companies / websites or business establishments, then you would need to enter into separate agreements with each alliance partner. Typically these agreements should cover the various areas of operations of your e-company including logistics, technology and payment gateways. The agreements should clearly set out the obligations and liabilities of each partner as well as the exact arrangement through which the services are being provided. An emphasis should be placed on indemnity from the actions of the alliance partners. For eg. If your website, facilitates e-shopping, you should take an indemnity from the suppliers of goods for the quality of goods being supplied and an indemnity against any consumer complaints.

(d) Content development/licensing agreements

The first thing a consumer or prospective client will see is the website that your company puts up on the web. Your website is the only interface between you and your client. The content you display on the website will therefore be of great importance. For this purpose, you may hire a content development firm to develop original content for the website. Alternatively you may license already existing content from a content development firm or from the original owner of the content. This would involve keeping in mind a whole lot of issues ranging from indemnities, updating of the website on a regular basis, caching and perhaps the most important being Intellectual Property Right (IPR) issues.

Your company must ensure that the ownership of all IPR developed for your site vests with you and not with the content development firm and further that only your company would have the right to sub-license the content.

Click here for the third part 'Understanding the assets and liabilities'