Before You Bring in a Partner:
“The Legal Questions That Are Rarely Asked”

Startup founders often don’t know how, when, or who to consult when it comes to legal matters, which makes it crucial at this stage to seek legal advice from a professional and experienced lawyer.

Here, we aim to lay down general foundations about what should be clarified at the outset of any partnership, what needs to be known, what questions must be asked, and how agreements should be formed—especially when establishing startups or entering new business partnerships. While activities may differ, the legal foundations remain the same.

How will the company be managed?

Who will have management rights?

Who will be held responsible?

How will profits be distributed?

What is the potential for the company’s growth?

What is the nature of the relationship between the partners?

These are questions that must be discussed with a professional and experienced lawyer, especially when the business is of an industrial or commercial nature.

Before answering these questions, we want to emphasize that in business and partnerships—regardless of their form—there are no fixed legal tips. Legal advice is always based on the type of business, the goals of the partners, and their agreements. This highlights the crucial role of a professional and experienced lawyer in translating these goals and agreements into solid legal frameworks that protect all parties in the future.

How Will Your Company Be Managed?

The management structure of a company can be determined by the partners however they see fit. There can be joint management, delegated responsibilities, or complete separation between ownership and management. This underlines the importance of having a permanent legal advisor to ensure clarity in assigning responsibilities.

Legally defining and documenting roles is a natural and entirely possible step. While the terms of management and responsibilities can be amended later, clearly defining the relationship between partners is essential for the company’s future direction and for structuring the legal documents accurately from the beginning. Management rights are entirely in the hands of the partners during company formation—they can choose one partner, all partners, or even an external manager. In such cases, it is recommended to consult a professional and experienced lawyer, particularly when structuring large-scale companies.

Who Is Responsible?

Responsibility—whether civil or criminal—does not necessarily correlate with ownership. It is tied to whoever holds management authority. This is where separating management from capital becomes vital. The owners of a company are not liable for customs violations or criminal commercial offenses committed during operations. The person with management authority is the one who bears responsibility, whether they are a shareholder or not. These responsibilities are determined based on each person’s assigned duties and powers, which should be set in consultation with a professional and experienced lawyer.

How and When Will Profits Be Distributed?

“How and when will profits be distributed?” is a question that’s usually difficult to answer before operations begin. But the more important question—“How can we ensure we are not cheated in profit distribution?”—can indeed be addressed, based on each individual case. This is where corporate legal consultations play a critical role in clarifying mechanisms and oversight of profit distribution.

The company’s management is fully responsible for deciding whether or not to distribute profits, based on company accounts. These accounts should be monitored by the partners. It is best to agree clearly on financial management methods and how financial reports will be reviewed. That is what ensures the prevention of fraud by management—whether internal or external.

We recommend maintaining accurate accounting records and ensuring strict financial oversight by a dedicated auditor, especially in non-personal relationships and partnerships built primarily on financial interests rather than personal ones.

What Is the Company’s Growth Potential?

What Is the Nature of the Relationship Between Partners?

Growth potential is a question the investor must answer before the legal advisor. What is the founders’ long-term vision? Have they planned to establish a legally sound company in Egypt?

Creating a preliminary business plan before launch is one of the main pillars of success. The nature of the relationship between partners is also a key issue to address before formation.

• Is it a personal relationship?

• Is it a family-based relationship?

• Is it a relationship based solely on financial interest?

Your answers to these questions help define the correct legal structure tailored to your company and its activity. These general guidelines apply regardless of whether the business is in tech, commerce, or industry. Consulting a professional and experienced lawyer is one of the most important contributors to your commercial success.