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Contracts for spin-off companies

Declaration of Intent  

In more complex business cases, especially when third party investors are involved, the founding process of the company starts with the drafting and signing of a ‘declaration of intent’, sometimes referred to as a letter of intent (LOI), heads of terms or memorandum of understanding (MOU).
The purpose of a declaration of intent is to agree on the most important subjects of the new venture, such as:

• purpose and operating field;
• division of shares and/or certificates of shares;
• directors and decision-making;
• intellectual property rights;
• exclusivity, confidentiality, liability.

Please note that despite the name of a document , such as ‘letter of intent’, it might well be that such document includes legally binding agreements! If that is not intended, this should be made very clear in the text of the document (‘parties have the aim to..’, parties intend to cooperate and will further discuss the conditions..’ etc).

Deed of Incorporation/articles of association  

Under Dutch law a BV can only be incorporated by a public notary, on the basis of a deed of incorporation, including the articles of association (statuten) of the company. The general principles of the BV are laid down in this document, such as governance, treatment of profits, rules for shareholders meetings etc.

Shareholders Agreement

In a shareholders agreement, the founders of the company agree on a number of issues that affect them and their relationship, as well as their relationship towards the company. For example, it might be sensible to agree that during the start-up phase of the company, any profits of the company will be retained in the company for new investments, and will not be transferred to the shareholders as dividend. The shareholders also need to make arrangements in case a third party investor makes an offer to buy shares in the company, or if a shareholder wants to transfer his shares to a third party.

Arrangements between a spin-off company and the Institution

The Institution may not only be a shareholder (through its holding company), but is often also a supplier to the company. Careful arrangements should be made with respect to the following subjects:

• Use of intellectual property rights, by granting a license to the company.
• Use of the name/trademark of the IXA partner.
• Use of facilities, e.g. floor space, IT, etc.
• Use of employees (especially hours invested by the inventor or other staff).

Throughout the process IXA can assist and provide guidance.