Entrepreneur: legal documents for your startup

You have the idea. You have the energy. You are ready to build something. And then there is the legal side. For many entrepreneurs the legal part of starting a business is overwhelming, and far too many put it off until a problem arises.

That is a mistake. The right startup documents from the beginning protect you, your co-founder, your employees and your business. And they do not have to cost a fortune.

Here is the complete guide to the legal documents your startup needs, organised by when you need them.

Phase 1: before you open the doors

1. Founders' agreement (co-founder agreement)

If you start with one or more co-founders, a founders' agreement is the most important document of all. It sets out:

• Ownership shares: who owns what?
• Vesting plan: are the shares earned over time?
• Roles and responsibilities: who does what?
• What happens if a founder leaves the business?
• Decision-making: when is unanimity required?

A founders' agreement creates clarity and prevents the conflicts that destroy many startup partnerships. Draw it up before you begin creating anything of shared value.

2. Non-disclosure agreement (NDA)

Before you share your idea with potential investors, partners, freelancers or early employees, you should consider a non-disclosure agreement (NDA).

An NDA binds the recipient not to pass on or exploit the information you share. It is especially relevant:

• At early investor meetings
• Before you share product specifications with suppliers
• Before freelancers begin work on core components

3. Articles of association

When you form an ApS or A/S, you must have articles of association. They define:

• The company's name, purpose and registered office
• The capital structure and share classes (for an A/S)
• The powers of the board and management
• The rules for transferring shares
• The dissolution of the company

Most people incorporate via the Danish Business Authority's self-service portal with standard articles. For simple structures that can work, but if you are several founders or expect investors, the articles should be adapted.

Phase 2: your first employees and business partners

4. Employment contracts

Under the Employment Certificate Act (ansættelsesbevisloven), an employee is entitled to written information about the terms of employment when the average working time exceeds 3 hours a week measured over a 4-week reference period (or where no guaranteed amount of work has been set in advance). The earlier threshold of at least 1 month's employment and 8 hours' weekly working time was abolished by the new rules from 2023. Even for employment below the threshold, a written contract is good practice.

An employment contract must, among other things, contain:

• The name and address of the employer and employee
• The start date and place of work
• The job title and description
• Pay and allowances
• Working hours
• Notice periods
• Holiday terms
• Any probation period

If you do not comply with the duty to provide information, you as the employer can be ordered to pay compensation to the employee.

5. Freelance/consultancy agreement

Do you use freelancers or consultants? Always make a written agreement, even for short tasks. A good freelance agreement specifies:

• The scope of work
• Price and payment terms
• The delivery date
• Who owns the rights to the work produced?
• Confidentiality
• What happens on delay?

The IP clause (copyright in the deliverable) in particular is often overlooked, with potentially costly consequences if you need to use the produced material commercially.

6. Shareholders' agreement

If your startup has or expects investors, a shareholders' agreement is indispensable. It governs the relationship between the owners and typically contains:

• The board composition and influence
• A right of first refusal on the sale of shares
• Anti-dilution provisions
• Drag-along and tag-along rights
• Information duties towards investors
• Exit scenarios

A shareholders' agreement is more complex than most standard documents and should be reviewed by a lawyer who knows the startup ecosystem.

Phase 3: customers and suppliers

7. Terms and conditions of sale

Every business that sells products or services should have written terms and conditions of sale. They protect you by setting out:

• Payment terms and interest on late payment
• Delivery times and liability for delay
• The right to complain and any warranties
• Limitation of liability
• Choice of law and venue

For B2B businesses you can insist that your terms apply over the customer's purchasing terms, but only if it is stated clearly.

8. Master supply agreement

For ongoing supplier relationships a framework agreement (master supply agreement) is useful. It sets the general terms of the collaboration so you do not have to negotiate terms from scratch on every order.

9. Service agreement

Do you deliver ongoing services (a software subscription, cleaning, IT support)? A service agreement specifies:

• The scope of the service and the SLA (Service Level Agreement)
• Prices and adjustment
• The notice period
• Operations and support

The shareholders' agreement: the document you must not forget

If you have formed an ApS or A/S with co-owners, a shareholders' agreement is one of the most important documents for your business's future. Unlike the articles of association, the shareholders' agreement is a private agreement between the owners. It is not registered with the Danish Business Authority, but it is legally binding.

What does a shareholders' agreement govern?

A shareholders' agreement can cover many aspects of ownership:

• Right of first refusal: if an owner sells, the other owners have the right to buy the share at the same price as a third party
• Drag-along: the majority can compel the minority to join if an acquisition offer comes in
• Tag-along: the minority can require to be included in a sale on the same terms
• Lock-up period: the owners commit not to sell for a period
• Non-compete clause: owners may not start a competing business
• Deadlock mechanism: what happens if the owners cannot reach agreement?
• Vesting: the shares are earned over time, so an owner who leaves the business early loses a portion

The shareholders' agreement is particularly important in three situations: at start-up with co-founders, on investors' entry and on succession.

Company formation: getting off to a good start

If you form an ApS, there is a set procedure: choosing the company name, paying in the share capital (a minimum of DKK 20,000 for an ApS), drawing up the articles of association and registering with the Danish Business Authority.

Many people use the Business Authority's standard articles for formation, but that is not always the best solution. If you have special wishes on share classes, transfer restrictions or voting rights, the articles should be adapted to your structure.

Phase 4: GDPR and compliance

10. Privacy policy and cookie policy

If you have a website or app that collects personal data, a privacy policy is required by law under the GDPR. It informs users about:

• What data you collect and why
• Who has access to the data
• How long data is stored
• The user's rights (access, erasure, data portability)

Complying with the GDPR is not only an ethical requirement. Breaches can lead to fines of up to 4% of global annual turnover or EUR 20 million, whichever is higher.

11. Data processing agreement

Do you use third-party software to process customer data (for example CRM, email marketing, accounting software)? Then you need a data processing agreement with the supplier. It is a GDPR requirement.

Document overview: when do you need what?

Document	When
Founders' agreement	Before formation (if co-founders)
NDA	Before sharing sensitive information
Articles of association	On formation
Employment contract	Before the first employee
Freelance agreement	Before working with freelancers
Shareholders' agreement	Before investors enter
Terms of sale	Before the first sale
Privacy policy	Before launching a website/app
Data processing agreement	Before using third-party services

Common mistakes entrepreneurs make

1. "It's just the two of us, we don't need paper" That sentence is the beginning of many expensive conflicts. Oral agreements are hard to prove, and as the business becomes more valuable, the incentive to remember things differently grows.

2. Copied contracts from the internet A contract from a US entrepreneur site does not necessarily apply in Denmark. Danish law has specific requirements, especially in employment law and GDPR.

3. No IP clause in freelance agreements Without a clear agreement, the copyright in a freelancer's work as a rule belongs to the freelancer, not you.

4. Forgotten NDA before pitch meetings Investors rarely sign NDAs before an initial meeting, but suppliers and early partners should.

5. Failing to update agreements The business develops, and the agreements should keep pace.

What does it cost?

A startup package at a law firm can cost DKK 15,000 to 50,000 for the basic documents. With a tried-and-tested template you can get a long way for a fraction of that. Simple standard contracts such as an NDA, an employment contract and a freelance agreement are the cheapest.

For more complex documents such as shareholders' agreements and articles of association with special clauses we always recommend legal assistance. But for the many standard documents a template is an efficient solution.

Conclusion

The legal documents are not the most fun part of being an entrepreneur. But the right agreements from the beginning are an investment in the business's stability and your peace of mind. Start with the founders' agreement and the NDA, and add the other documents as the business grows.

Frequently asked questions

Do I need a lawyer for all these documents?

No. For standard documents such as NDAs, employment contracts and freelance agreements, a legally vetted template is sufficient. For shareholders' agreements and complex M&A documents we recommend legal assistance.

What is the difference between a founders' agreement and articles of association?

The articles of association are the public document registered with the Danish Business Authority. The founders' agreement is a private agreement between the co-founders and governs the internal relationship, typically in far more detail on vesting, roles and conflict handling.

Can I start a business as a sole proprietorship without any of these documents?

Technically yes, but you are still obliged to comply with the GDPR, and employment requirements and customer agreements apply regardless of business form.

When do I need a shareholders' agreement?

As soon as possible, but at the latest before investors with shares enter. It is far harder to negotiate terms after they have become owners.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.