A pragmatic, diligence‑ready framework for founders building in regulated and quasi‑regulated environments. The pack covers core legal, governance, data, and commercial pillars to help you move faster with fewer risks.
This material is provided for general informational purposes only and does not constitute legal, tax, accounting, or regulatory advice. It is not a substitute for advice from qualified counsel who can consider your specific facts, jurisdictions, and regulatory perimeter. Accessing or using this pack does not create an attorney–client relationship.
Regulatory expectations vary by location and business model; templates and term sets are illustrative only and must be tailored before use. We make no warranties as to completeness or accuracy and disclaim liability for actions taken or not taken based on this content. If you operate in or adjacent to regulated financial services, consult with counsel and, where appropriate, engage with relevant regulators before launching products or holding client assets.
Adopt a phased approach. In the first 30 days, execute founder IP assignments, incorporate, implement NDAs/PIIAs, and establish a privacy/security baseline. By 60–90 days, finalize ESOP, core commercial templates, privacy policy and DPA, and board cadence. Thereafter, deepen your regulatory roadmap, insurance stack, and audit readiness. Treat each section as a checklist of decisions, documents, and controls to operationalize.
Align on mission, roles, time commitment, and equity split. Adopt four‑year vesting with a one‑year cliff and monthly vest thereafter; implement reverse vesting and prompt tax elections. Assign all pre‑existing IP and domains to the company (license‑backs only if necessary). Define good/bad leaver mechanics and catalogue all pre‑formation assets clearly on exhibits.
Select the entity and jurisdiction to fit capital, tax, and regulatory plans (e.g., Delaware C‑Corp; UK Ltd). If multi‑market, consider a holdco–opco and plan for permissions early. Establish board composition, consent thresholds, execution policies, and a housekeeping calendar for filings, approvals, and grants.
Use mutual NDAs for partner diligence, one‑way NDAs for contractors/candidates, and clean‑team NDAs for sensitive regulatory or M&A diligence. Define Confidential Information, permitted use, equitable relief, and term (2–5 years; longer for trade secrets). Avoid overreach into IP assignment or non‑competes. Maintain an internal playbook and data‑room procedures.
Ensure chain‑of‑title from day one via PIIAs, contractor agreements with assignment and moral‑rights waivers, contribution agreements for pre‑formation code, and OSS policy. Maintain an IP assignment register and third‑party code inventory. Use permissive OSS strategically; avoid copyleft contamination in core IP.
Keep a clean cap table and plan an option pool sized for 12–18 months of hiring. Implement an equity plan with market vesting, valuations for pricing where required, ROFR/co‑sale, and a single source‑of‑truth cap table system. Prefer time‑based vesting broadly; keep performance‑based vesting for senior roles with objective milestones.
Set governance until a priced round: board composition, reserved matters, pre‑emption, transfer restrictions (ROFR/Tag/Drag), information rights, vesting/leaver provisions, deadlock resolution, and confidentiality. Align drag‑along with later investor terms and dovetail leaver mechanics with employment contracts.
Map regulated activities, choose licenses or exemptions, set safeguarding and capital, and build compliance (policies, appointments, financial promotions). For RegTechs selling to regulated clients, be vendor‑risk‑ready: certifications, DPAs, audit rights. Create a permissions matrix and regulator‑facing artefacts early.
Adopt privacy‑by‑default and security‑by‑design. Maintain privacy policy and DPA, ROPA, TIAs, transfer mechanisms, security policies, SOC 2/ISO roadmaps, and DPIAs for high‑risk processing. Enforce SSO/MFA, least privilege, vendor tiering, and incident response with clear severity, triggers, and comms.
Stand up coherent templates: MSA & Order Form, SaaS Agreement & AUP, PSA & SOW, Reseller/Referral, Evaluation/POC, Enterprise Support & SLA. Align on liability caps, indemnities, uptime/credits, termination, audit/pen‑testing, and export/sanctions compliance. Run a playbook with segment‑based fallbacks and deviation tracking.
Implement compliant global hiring: offers and employment agreements, contractor agreements with IP assignment, handbooks, code of conduct, applicable post‑termination restrictions, equity awards, and secure offboarding. Manage worker classification and plan immigration for critical hires.
Open business banking and payment accounts with dual controls; adopt approvals matrices; define revenue recognition and collections; implement expense policy; apply sanctions/AML controls; and align capitalization policy with audit‑readiness and board reporting cadence.
Run scheduled board meetings with packs and written consents for routine actions. Maintain conflicts policy, information rights/KPI reporting, risk register, compliance attestations, and adequate D&O cover. Keep a current data room with corporate, IP, regulatory, and financial artefacts.
Bind GL, tech E&O/professional liability, cyber (with incident response panel), D&O, EPLI, and crime/fidelity (esp. for payments/custody). Align limits and exclusions with contractual and regulatory obligations.
For seed: SAFEs/ASAs/convertibles with cap/discount, pro‑rata, and info rights; avoid excessive side letters. For priced rounds: term sheet, SPA, amended charter, IRA, ROFR/Co‑Sale, Voting Agreement, and consents. Keep disclosures coherent; reconcile the cap table; prepare risk factors.
Map regulations to controls and policy suite (infosec, AML/CTF, sanctions, financial promotions, complaints, whistleblowing, retention). Track training attestations, third‑party risk with vendor tiering, monitoring/testing schedules, and regulatory engagement logs.
Negotiate settlement/chargeback allocation, safeguarding and client‑fund segregation, scheme rule flow‑downs, audit rights/pen tests, SLAs, data rights/telemetry, change‑in‑control/assignment, and termination assistance/exit plans. Ensure your stated permissions match reality.
Stand up marketing approvals with compliance review, disclaimers and risk warnings, performance‑claims controls, social media governance, referral/affiliate terms, and complaint handling/redress. Archive approvals; for B2C, align UX with distance‑selling/consumer‑rights and unfair‑terms rules.
Standardize governing law/forum, arbitration vs courts strategy, escalation and cure periods, injunctive relief for IP/confidentiality, and litigation holds/e‑discovery readiness. Maintain incident logs and privilege protocols.
Use founder service agreements with indemnities, confirm personal IP clean‑up and assignments, plan equity tax elections, and consider estate planning. Avoid personal guarantees. Manage secondary sales with counsel to avoid investor friction.
Preserve optionality: keep IP chain‑of‑title clean, ensure assignability in key contracts, track customer consent requirements, maintain an up‑to‑date data room, and understand change‑in‑control approvals. For RegTechs, quantify risk‑reduction outcomes and audit results to support valuation.
30: Incorporate; execute founder stock and IP assignments; tax elections; NDAs/PIIAs; privacy/security baselines; bank accounts with dual controls; first board meeting & approvals matrix.
31–60: Approve ESOP and grants; finalize MSA/SaaS & DPA; vendor risk; publish privacy policy and terms; bind insurance (cyber, D&O); initiate option valuation.
61–90: Board cadence & KPI reporting; complete security/compliance roadmaps; finalize financial controls & first month‑end; stand up data room; remediate contract/IP gaps; prepare fundraising materials.
Liability: target cap ~12 months’ fees; carve‑outs: IP infringement, willful misconduct. Indemnities: IP infringement; narrow data claims; exclude SLA credits. Security/audit: reasonable rights with limits, third‑party attestations OK. Termination: avoid TFC on annual; offer ramps/downgrades; time‑bound data export for PS.
Security overview/whitepaper; pen‑test summary; sub‑processor list; DPA template; incident response plan; access control policy; data‑flow diagrams; control test results; training attestations; vuln‑management KPIs.
Corporate formation/bylaws; board minutes/consents; cap table/option plan; IP assignments/OSS inventory; key contracts; privacy/security policies; regulatory analyses/licenses; insurance certificates; financials/model; litigation/dispute log.
Book a free 20‑minute triage call. We’ll assess your current posture and prioritise the highest‑leverage actions for the next 30–90 days.
Covenant Advisory Group Limited · London, United Kingdom · info@covenantadvisorygroup.co.uk