Is there a legal way to define the value of a private company that would hold up in court? I'm a software developer who wants to charge companies based off any reasonable metric of worth I can find. For public companies, "Market Cap" is a pretty straight-forward choice. It can be defined as a simple function. But for private companies, it's not so easy. For what I'm doing, I really don't need a high level of accuracy. I could deal with a tolerance of +/- 10%, and just take the low end. But I do need something that can be checked by both parties. These are the methods listed in the linked article: CCA (comparable company analysis) - basically look up a bunch of public companies with similar attributes, average them. Private Equity Valuation Metrics - appears to require a recent merger, acquisition, or IPO... but should one of those happen, there is an evaluation stage Then rest are even more complicated... My current idea is that private companies would check out their evaluation through some standardized tool and then be able to archive it. If I had some means of coming up with a number and presenting it, would it be legally acceptable to define that as their company value in a license? What alternatives to legally defining the value of a private company am I missing?
Defining the value of a privately held company is hard (tax returns don't provide a very informative basis because accountants will tend to under-value things like "goodwill" in order to avoid paying tax). However that doesn't matter for this stack, because the only legal question is: If I had some means of coming up with a number and presenting it, would it be legally acceptable to define that as their company value in a license? And the answer is: absolutely yes! You are pretty much entirely free to define terms in your license as you see fit. If you want to define "company value" as meaning "the annual gross salary paid to receptionists", go for it. (You would probably need to define what a "receptionist" is in this case).
When you write: a person buys the software for Rs 10000000 It is not quite clear if you mean &quot;a person buys all rights to the software&quot; or &quot;a person buys a copy of the software.&quot; I will assume the first of these. The value of IP that a person currently owns is generally determined by an estimate of the future income likely to be produced by exploiting that IP, or an estimate of the current market value of that IP. However, when the IP has been sold in toto, the sale price will be the value at the time of sale. The taxable amount will be the sale price less the allowable expenses to date, including the expenses of the sales process, if any. Using the figures from the question, this would be 9890000, but in a real case there would probably be additional costs that could be used to reduce the taxable amount. The question says: The software developer files an income tax return for Rs 0 Does this mean that the developer claims that there was no taxable income due to the development and sale? It is hard to see how the developer would arrive at such a figure.
On what grounds would you sue? Contract Well, I think that you would struggle to find the necessary elements (see What is a contract and what is required for them to be valid?) In particular, you would struggle to prove that there was intention to create legal relations on their part and possibly on yours. Are you able to identify in your "back &amp; forth" a clear, unequivocal offer and acceptance? Without knowing the details of the "back &amp; forth": I was hoping that someone at $organization might be willing to write an article explaining what you do, the history of the organization and how it works appears on the face of it to be a request for a gift; not an offer to treat. Promissory Estoppel If you don't have a contract then it is possible (IMO unlikely) that they induced you by your actions to commit resources (your time in writing) in anticipation of a reward (them publishing what you wrote). To be estopped they would have to have known that you were writing the article in the expectation that it would have your organisation's name in it, that they did not intend for that to happen and that they allowed you to invest those resources notwithstanding. If you can prove all of that then you can require them to do what they promised. The big difficulty I see in this is did you tell them that a) you were writing the article, b) it would have your name in it and c) you expected it to be published in that form. Copyright If they publish the work or a derivative work without your permission you can sue for breach of copyright. As it stands, they probably have an implied licence to publish and you would need to explicitly revoke that. Options There are two reasons to go to court: Money Principle If you are going to court for money then this is at best a risky investment and at worst a gamble: balance your risk and reward carefully. If you are going to court for a principle then I simultaneously admire your principles and think you're an idiot. Make a deal Explain that the reason that you wrote the article was a) to support their fine publication and the fantastic work it does (even if you don't) and b) to garner good publicity for your organisation. You understand and admire their strong editorial stance (especially if you don't) but the article involved a considerable amount of work and could they see their way clear to give you a significant discount (~80%) on a full page ad facing the article.
You mean like Unilever, and countless others do? Yes. Many, many companies control a stable of brands, often of competing products. This is particularly prevalent in grocery lines (cleaning, food, beauty products) and motor vehicles (there are dozens of brands of motor vehicle but only a handful of automotive companies). Clearly, these products have different features (improvements) – you are entitled to segment your market anyway you like. If they are actually produced by the same company, keeping that secret would be virtually impossible. If they were separate companies (even with licencing agreements etc.), well, they are not the same company even if they have common ownership. As for having a monopoly: if you hold a patent you are allowed to have a monopoly, if you don't, expect to see knock-off rocket boots on the shelf in a week.
First, shares are a form of raising capital. A company must have some capital, and Bob receives the shares in exchange. So it is not free (the exact minimum would depend of the requirements for incorporating). In both cases, Bob is not only a shareholder but the manager of Bob Limited. Bob will not incur liabilities for being a shareholder, but he can be at fault for his actions as a manager (for example, if he gives false financial data about Bob Limited in order to get credit for investing). Do not confuse Bob the Managerand Bob the Shareholder, as they are different roles. Of course, if you are a trading company and Bob the Manager approachs you asking for credit for Bob Limited, you will have to consider which assets Bob Limited has to cover possible debts, and you will ask him the books or other proof. If Bob the Manager provides you the correct information about Bob Limited and does nothing "funny"1, Bob the Manager is off the hook; you did provide credit hoping to get profits but you knew that there was a risk, and you were given the data needed to evaluate that risk. If Bob the Manager did things the wrong way (he did "cook" the books, he did provide false data or he did appropiate Bob Limited money) then Bob the Manager will probably be prosecuted. But Bob the Shareholder will not be liable for this, he will only lose the assets he did put forward as capital as the Bob Limited value will drop to zero. B) does not change much the situation, Matt still only loses his part of the company2. The difference here is that if Bob the Manager did "funny" things and did not manage the company correctly then Matt may sue Bob the Manager, too. 1For example, using the assets borrowed to buy a nice mansion and then selling it to Bob the Shareholder (or to Bob the Manager) for $1. 2Which is not valued at $50 but as half the net worth of the company. Of course, if the company was valued at $100.000.000 and Bob the Shareholder sold half of its shares for $50, people from the tax office are likely to come asking lots of questions.
It would depend on how the ownership contract is written. 30% sounds like a minority stake, so I don't know how they could block new investments unless the contract requires a super-majority to approve new rounds of financing. How does the remaining 70% of ownership feel about this? If they are abiding by the terms of the ownership contract I don't see that this is questionable behavior on their part. This is a business relationship. Business partners may come to have different outlooks on the future of the company, and the best way to protect their investment. Consider flipping the viewpoint: "I'm a minority owner in a company I no longer have confidence in. I would like to dissolve the company and sell off the assets to re-coup as much of my original investment as I can. The other owners want to chase this to the bitter end, and do a new round of financing, which will significantly dilute my shares, without (in my opinion) giving the company a real chance of success. What can I do?" When the founder of your friend's company accepted money for shares in the company, they gave up absolute control over the company's direction. Assuming none of the parties are acting in violation of the ownership contract, the most reasonable way to resolve a conflict like this is to buy out the dissenting shareholders.
Usually I would think one answer to a question is enough. But since your edits have transformed a reasonable procedural question into what appears to be a rant about unfairness of the sort which any bankruptcy court has heard hundreds of times before, I will give another piece of advice: Focus on one thing at a time. The judge at the hearing of the application will be deciding (if your question is accurate) the single point whether a house should be sold. The submission "There is an application to annul the bankruptcy to be heard on XXX; if it succeeds this application is a waste of money and if it fails there will still be time for this application before the time limit, so you should adjourn till YYY" is a reasonable one that he will take into account. Saying "The bankruptcy order should never have been made; it was a mistake by my accountants and HMRC, and a High Court Judge joined in the conspiracy" will get you precisely nowhere. Even if the judge believed you rather than the written evidence, it has no bearing on the point he is being asked to decide. More generally; besides casting your arguments into proper shape, there is another good reason to consult a professional, namely that he can tell you when to give up. The courts are bound by laws and regulations; however unfair you may think the result, at some point it is necessary to accept the reality rather than wasting time and money making points that the law cares nothing about. (And no, I see no point discussing this further in comments. This answer can be upvoted if you think it helpful or downvoted if you think it "not useful"; it isn't something to argue against.)
the first two highlighted parts seem to contradict each other. No, in this case they do not. The first highlighted portion refers to works or items produced "for or under the direction of the Company", whereas the second highlight refers to your creations that satisfy conditions (a) and (b). Where contradictions actually exist, the doctrine of contra proferentem entitles you (the non-draftsman of the contract) to adopt the portion or reasonable interpretation that favors your legal position. Also wondering how valid those statements actually are They are valid and become enforceable as soon as you sign the contract or your subsequent conduct reflects your acceptance thereof. it's a matter of privacy. So the question is what I can do or what the reality is of the situation The reality is that you are asked to sign a contract that is abusive and ridiculous. One vulnerability from describing your inventions (presumably in Appendix A) is that the employer gets "irrevocable, worldwide, etc" rights on them as soon as you "use or disclose any [items listed in Appendix A] when acting within the scope of [your] employment". This means that if instead of reinventing the wheel you share or apply any portion of your prior creations so as to enhance your productivity, you knowingly and irreversibly grant to the employer perpetual rights to those items. Legal disputes regarding APIs can become extremely intricate. And, since judges usually have no decent background on IT, even those few judges with integrity are unlikely to grasp the key subtleties that would lead to a correct ruling. "not useful with or related to any Company Interest" is very vague. The company could be interested in literally anything these days. Clauses which are too vague or excessively wide-encompassing are supposedly stricken as unconscionable, unenforceable, etc. However, I personally would foreclose upfront the risk of judicial hassle and decline the abusive contract. Legal issues aside, keep in mind that you are offering your expertise (in terms of supply &amp; demand, you are on the supply side). This fact has a less derogatory connotation than "asking for a job". Accordingly, the relation between the parties should be more leveled.