LAW & STARTUP

Legal Experts Essential for Startups

Seeking solid legal help from professionals is instrumental when starting a new business and helping it grow, experts claim as a MoU is signed to support new businesses
Nget Sophat, co-founder and CEO of eCO exchanges MoU with Son Sokeng, Managing Director of Sithisak Law Office
Nget Sophat, co-founder and CEO of eCO exchanges MoU with Son Sokeng, Managing Director of Sithisak Law Office

Legal professionals play a crucial role in enhancing a company's position and assisting new business owners as they launch ventures and continue to grow and function.

Ngeth Sophat, co-founder and CEO of eCO, stated that legal services are key to help new entrepreneurs with their startups. He recalled that he used legal advice and company registration services when he registered his startup in early 2021.

“Having such a service, the team does not have complicated [issues to focus on] and can save time to focus on creating products to launch on the market. However, without legal services, the team can spend a lot of time studying, understanding and processing the procedure,” he said.

He added that after registration, companies have to perform general duties, such as monthly and annual tax declarations and compliance with labor law obligations and regulators. This means entrepreneurs need skills in this field or have staff dedicated to these roles.

Sophat said entrepreneurs need to learn these kinds of skills themselves, which takes time. Alternatively, they need to hire staff, which can cost a lot of money and it is not guaranteed that the staff can comply 100 percent. He added, “If you find a legal service provider responsible for this, entrepreneurs can save time and a large part of the cost.”

It is also imperative that entrepreneurs ensure they comply with the law and fully protect the interests of their company. Among the things entrepreneurs should know and do, Sophat said they must be smart and recruit the help of legal experts.

The Cambodian government has worked to increase the mechanisms available to support entrepreneurs through the creation of new entrepreneurship support institutions, tax exemptions in certain priority areas, the establishment of digital registration, and training and consulting.

“Entrepreneurs find this very complicated, however, eCO sought legal counsel on the matter, giving them a lot of good and clear advice in order to avoid these headaches and concerns,” Sophat told Kiripost.

Son Sokeng, Managing Director of Sithisak Law Office, said the benefits of business registration include securing legal entities, increasing trust between trading partners, legal protection in the event of unfair competition or trade disputes, receiving legal documents for various uses, and ensuring a good reputation when conducting business.

Sokeng continued that when obtaining shareholder agreements, additional shares, investor agreements, employment contracts with employees, confidentiality, and agreements with investors, if entrepreneurs lack expertise they must be cautious.

eCO has agreed to sign a Memorandum of Understanding with law firm Sithisak Law Office, which specializes in commercial law consulting. Sophat said that we are very comfortable with helping to draft contracts, agreements, legal review of those documents, as well as providing important legal advice.

Sokeng said the MoU aims to support new business projects by providing full support for shareholder agreements, shares, investor agreements, and contracts with employees.

“Everybody needs to know the law, the rule of law implemented for citizens to enforce. Doing business requires more than normal people. Business needs service agreements and terms of service of business partners and consumers, where legal principles are also established. Legal experts should aim for mechanisms,” Sokeng said.

He added that in order to have a clear and long-term protection of his institution, entrepreneurs need the help of specialized organizations, such as law firms or agencies. While these can often be hefty expenses for entrepreneurs, in the long-run they pay off.

Sophat said that if entrepreneurs start to test their ideas, they should not spend a lot in the beginning, but founders need to be clear for the longevity of the business and must be prepared for anything that might happen.

Furthermore, most entrepreneurs dream of having their company listed on the stock market and expanding into foreign markets. To achieve this, legal readiness is essential.

According to Sophat, eCO should be able to represent Cambodian brands both domestically and internationally. To do this, his team must collaborate with the legal division to prepare from the beginning.

“Entrepreneurs should not spend too much at the beginning. However, if we are clear on business ideas and we put life in it, it should be a legal priority. Entrepreneurs should find legal specialized help, but must be smart in analysis,” he said.