Tutorial 8 (topic 7) Preparing A Proper Ethical And Legal Foundation
Q1. In general, do entrepreneurs tend to overestimate or underestimate their knowledge of the laws that pertain to starting a new firm? What does answer to this question suggest that entrepreneurs do before they start a firm?
In general, entrepreneurs tend to overestimate their knowledge of the laws that pertain to starting a new firm. Before entrepreneurs start a firm, they should seek for lawyer to get some legal advice, get sources and information about the business, refer to book, or search the information thru the internet about the legal issue that they face.
Q2. Describe what is meant by the terms code of conduct and ethics training programs. What is their…show more content… Q3. Describe what a founders’ agreement is and why it’s important for a team of entrepreneurs to have one in place when launching a venture.
A founder agreement is a written that deals with issues such as the relative split of the equity among the founders of the firm, how individual founders will be compensated for the cash or the “sweat equity” they put into the firm, and how long the founders will have to remain with the firm for their shares to fully vest. It means founder agreement is a formal document that mention about the profit sharing between the founders by following the amount of initial investment between the founders. Items that include in a founders’ agreement are nature of the prospective business, a brief business plan, legal form of business ownership, buyback clause, description of the initial operating capital and others. It is important for a team of entrepreneurs to have one in place when launching a venture because it can avoid the conflict such the problem between the founders regarding the profit sharing and distribution of stock at the end of the business, avoid litigation, and to know the expectation of their own role in the organization. Therefore, founders’ agreement is important to act as a set of rules or guideline while founders are conducting their business and it can reduce most of the issues that can harm the performance of a business.
Q4. Describe the purpose of