{"id":3936,"date":"2024-12-18T14:26:36","date_gmt":"2024-12-18T14:26:36","guid":{"rendered":"https:\/\/sawaryn.com\/?p=3936"},"modified":"2026-10-23T09:42:12","modified_gmt":"2026-10-23T09:42:12","slug":"software-copyright-in-kind-contribution-company","status":"publish","type":"post","link":"https:\/\/sawaryn.com\/en\/publikacje\/software-copyright-in-kind-contribution-company\/","title":{"rendered":"How to Contribute Software Rights to a Company as an In-Kind Contribution"},"content":{"rendered":"<p>If you plan to contribute software to a company as a non-cash contribution, you need to ensure <strong><a href=\"https:\/\/sawaryn.com\/en\/publikacje\/copyright-law-it-industry-poland\/\">a valid transfer of copyright<\/a><\/strong>, appropriate documentation and a precise definition of the fields of exploitation. Mistakes at this stage can block company registration, lower the due diligence assessment or lead to a dispute with the software creator lasting for years. Below you will find specific risks, rules and implementation steps.<\/p>\n<h2>Why intellectual property rights matter to startups<\/h2>\n<p>As many as 80% of startups in the Podbeskidzie region hold intellectual property rights. In young companies and startups, these rights often account for a significant part of the value of the entire venture.<\/p>\n<p><strong><a href=\"https:\/\/sawaryn.com\/en\/publikacje\/protecting-intellectual-property-it-companies\/\">Intellectual property rights<\/a><\/strong> include, among other things, copyright, industrial property rights, rights to software, domains, logos and know-how. They are creations of the human mind fixed in a material form.<\/p>\n<h3>What this means for a founder<\/h3>\n<ul>\n<li>If you do not have cash to take up shares, you can contribute rights to existing software to the company as an <strong>in-kind contribution<\/strong> with a specified value.<\/li>\n<li>An in-kind contribution gives you voting power in the company in proportion to the value of the contribution.<\/li>\n<li>This lets you turn your idea into market value without having to commit cash.<\/li>\n<\/ul>\n<h3>What this means for an investor<\/h3>\n<ul>\n<li>An investor or <strong><a href=\"https:\/\/sawaryn.com\/publikacje\/term-sheet-podstawowe-informacje\/\">business angel<\/a><\/strong> assesses whether the copyright has been properly transferred to the company.<\/li>\n<li>The outcome of <strong><a href=\"https:\/\/sawaryn.com\/publikacje\/co-powinna-zawierac-umowa-inwestycyjna\/\">due diligence<\/a><\/strong> depends directly on the quality of the contribution documentation.<\/li>\n<li>Defects in the transfer of rights lower the valuation and may prevent financing.<\/li>\n<\/ul>\n<h3>What this means for the company<\/h3>\n<ul>\n<li>A properly contributed asset allows the company to develop and commercialize the software safely.<\/li>\n<li>Confidence that the rights were effectively contributed helps prevent corporate disputes between the shareholder who created the software and the company or other shareholders.<\/li>\n<li>Lack of that confidence creates a risk of company paralysis, years of litigation and, in extreme cases, liquidation.<\/li>\n<\/ul>\n<h2>How an in-kind contribution of copyright works<\/h2>\n<p>Economic copyright is transferable and may be contributed to cover share capital. The mechanism works as follows:<\/p>\n<ol>\n<li><strong>A shareholder contributes a non-cash asset<\/strong>, such as rights to software, to the company.<\/li>\n<li><strong>In return, the shareholder receives<\/strong> a specified number of shares in the company&#8217;s share capital.<\/li>\n<li><strong>If the contribution&#8217;s value exceeds the nominal value of the shares<\/strong>, the surplus (agio) increases the company&#8217;s reserve capital.<\/li>\n<\/ol>\n<p>Non-cash contributions do not have to correspond exactly to the nominal value of the share capital, but they must provide material coverage for it. This is connected with a guarantee of the company&#8217;s solvency and financial stability.<\/p>\n<h2>Risks when making an in-kind contribution: the contributor is responsible<\/h2>\n<h3>Contribution made directly by the creator<\/h3>\n<p>If you created the software yourself and contribute it to the company, the risks are minimal. You originally hold all rights to the software.<\/p>\n<h3>Contribution made by someone who acquired the rights<\/h3>\n<p>If you acquired the rights from someone else and want to contribute them to the company, the situation is more complicated. Before making the contribution, check:<\/p>\n<ol>\n<li><strong>Whether the rights were properly transferred to you<\/strong>: review the agreement transferring the economic copyright. Make sure the scope of your rights allows you to contribute the software to the company.<\/li>\n<li><strong>Whether the agreement prohibits further transfers<\/strong>: an agreement transferring economic copyright may restrict your right to transfer it again. This is a practice permitted by law that creates a risk of liability for the shareholder.<\/li>\n<li><strong>Whether you should budget for additional costs<\/strong>: an in-depth review of copyright transfer agreements usually requires legal support.<\/li>\n<\/ol>\n<blockquote><p><strong>Risk that the creator challenges the contribution:<\/strong> If you do not verify that the rights were properly transferred, the creator may challenge the contribution. The result may be a claim for remuneration for using the software without the creator&#8217;s consent or a demand to stop using it.<\/p><\/blockquote>\n<h2>Why enter into a separate contribution agreement<\/h2>\n<p>Lawyers disagree about whether transferring copyright in the company&#8217;s agreement or articles is sufficient, or whether a separate contribution agreement is necessary.<\/p>\n<p><strong>Recommendation: enter into a separate contribution agreement.<\/strong> It is the safer option for both the company and its shareholders. Here are three reasons:<\/p>\n<ol>\n<li><strong>You reduce the risk of problems at the registry court<\/strong> during company registration or an issue of shares.<\/li>\n<li><strong>You reduce the risk that the contribution will be challenged in due diligence<\/strong>: a prospective investor can assess the transfer of rights as effective.<\/li>\n<li><strong>The company gains control over the IP rights<\/strong>, making it easier to manage them and defend against claims by third parties.<\/li>\n<\/ol>\n<h2>What a contribution agreement should contain: points to address<\/h2>\n<h3>Basic terms of the agreement<\/h3>\n<p>When preparing a contribution agreement, precisely specify:<\/p>\n<ul>\n<li><strong>The subject of the contribution<\/strong>: exactly what you are contributing, including the software and scope of rights.<\/li>\n<li><strong>The value of the contribution<\/strong>: how much it is worth.<\/li>\n<li><strong>The terms for transferring the rights<\/strong>: how and on what terms the rights pass to the company.<\/li>\n<li><strong>The fields of exploitation<\/strong>: the ways in which the company may use the software.<\/li>\n<\/ul>\n<h3>Fields of exploitation: where problems most often arise<\/h3>\n<p>Fields of exploitation are specific ways of using a work, such as copying, distributing, modifying or making it available online.<\/p>\n<p>&nbsp;<\/p>\n<p>The rules for in-kind contributions differ depending on the type of company:<\/p>\n<p>&nbsp;<\/p>\n<table>\n<thead>\n<tr>\n<th>Company type<\/th>\n<th>Requirement for describing the contribution<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td><strong><a href=\"https:\/\/sawaryn.com\/publikacje\/umowa-spolki-z-oo-co-powinna-zawierac-i-jak-ja-przygotowac\/\">Limited liability company (sp. z o.o.)<\/a><\/strong><\/td>\n<td>The articles should \u201cspecify the subject of the contribution in detail.\u201d<\/td>\n<\/tr>\n<tr>\n<td><strong>Simple joint-stock company<\/strong><\/td>\n<td>The articles should specify \u201cthe subject of those contributions.\u201d<\/td>\n<\/tr>\n<tr>\n<td><strong>Joint-stock company<\/strong><\/td>\n<td>No requirement in the articles: the contribution should be described in the report prepared when the company is formed.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>Copyright law requires fields of exploitation to be specified in agreements transferring economic copyright. The rules do not give a clear answer as to whether the fields must also be specified in a company&#8217;s agreement or articles, and no uniform practice has developed.<\/p>\n<p><strong>Recommendation:<\/strong> Specify the fields of exploitation directly in the company&#8217;s agreement or articles. Merely stating that you contribute \u201csoftware created by the contributor\u201d may prove insufficient.<\/p>\n<p>Describe the fields of exploitation so that the company can:<\/p>\n<ul>\n<li>make profits from using the software,<\/li>\n<li>dispose of it by selling or licensing it,<\/li>\n<li>develop it in the future.<\/li>\n<\/ul>\n<h3>Open-source components in software<\/h3>\n<p>Before making the contribution, verify the software components. If the program uses open-source components, they may be subject to specific license restrictions that make it more difficult or impossible to contribute the software as an in-kind contribution.<\/p>\n<h3>New fields of exploitation: what happens as technology advances<\/h3>\n<p>A transfer of economic copyright covers only fields of exploitation known when the agreement is concluded. With the rapid development of AI and robotics, new fields of exploitation are likely to emerge.<\/p>\n<p>As a result, the creator, not the company, retains exploitation of the work in a new field.<\/p>\n<p><strong>What you can do:<\/strong> Reserve in the company&#8217;s agreement or articles a right of first refusal or priority to acquire new rights for the company. This gives the company a procedure for arranging the acquisition of rights in new fields in the future.<\/p>\n<h2>The creator&#8217;s moral rights: what not to overlook<\/h2>\n<p>Moral rights are non-transferable and do not expire. They include, among other things, the right to authorship and attribution. Regardless of how it acquires economic rights, the company must respect them.<\/p>\n<p>Practice has developed two solutions:<\/p>\n<ol>\n<li><strong>Authorizing the company to exercise moral rights<\/strong>: the creator consents to the company&#8217;s use of moral rights within a specified scope.<\/li>\n<li><strong>Undertaking by the shareholder not to exercise moral rights against the company<\/strong>: the creator undertakes not to exercise those rights in a way that obstructs the company&#8217;s operations.<\/li>\n<\/ol>\n<h2>Joint authorship, licenses and expiry of rights<\/h2>\n<p>Three additional points to consider:<\/p>\n<ul>\n<li><strong>Joint authorship<\/strong>: copyright may belong to several people at the same time. They may contribute their rights to the company jointly.<\/li>\n<li><strong>A license as an in-kind contribution<\/strong>: it is possible to contribute a license instead of transferring all rights.<\/li>\n<li><strong>Expiry of rights<\/strong>: economic copyright expires 70 years after the creator&#8217;s death and enters the public domain. This is of marginal practical importance for products with a short IT life cycle.<\/li>\n<\/ul>\n<h2>Checklist before making an in-kind contribution<\/h2>\n<p>Before contributing software to a company, go through this list:<\/p>\n<ol>\n<li><strong>Identify who created the software<\/strong>: if it was you, the risks are minimal. If you acquired the rights from someone else, continue to step 2.<\/li>\n<li><strong>Review the rights acquisition agreement<\/strong>: check the scope of rights and make sure there are no restrictions on further transfers.<\/li>\n<li><strong>Verify the software components<\/strong>: identify open-source components and their license restrictions.<\/li>\n<li><strong>Prepare a separate contribution agreement<\/strong>: do not rely solely on the company&#8217;s agreement or articles.<\/li>\n<li><strong>Specify the fields of exploitation<\/strong> in the company&#8217;s agreement or articles. Describe them so the company can use, dispose of and develop the software.<\/li>\n<li><strong>Address the creator&#8217;s moral rights<\/strong>: authorize the company to exercise them or require the creator not to exercise them against the company.<\/li>\n<li><strong>Reserve a right of first refusal for new fields of exploitation<\/strong>: protect the company if new ways of using the software emerge.<\/li>\n<li><strong>If several people hold the rights<\/strong>, establish the rules for making the contribution jointly.<\/li>\n<\/ol>\n<h2>Summary<\/h2>\n<p>From a business perspective, contributing software is a good alternative to a cash contribution. It allows you to:<\/p>\n<ul>\n<li>obtain voting power in the company without committing cash,<\/li>\n<li>bind the creator to the company and benefit from their potential,<\/li>\n<li>build company value by commercializing intellectual property,<\/li>\n<li>protect intangible assets and secure future revenue streams.<\/li>\n<\/ul>\n<p>The process requires care because it sits at the intersection of corporate and copyright law, and the rules do not regulate it directly. Plan the documentation and risk analysis before starting the process. With appropriate legal support, contributing software will not block your project.<\/p>\n<h2>Frequently asked questions<\/h2>\n<p><strong>How can you contribute software to a company and effectively transfer the copyright?<\/strong> Contribute the economic copyright in the software as a non-cash contribution to cover share capital. In return, you receive shares. To make the transfer effective, prepare a separate contribution agreement and precisely describe the subject and value of the contribution, the transfer terms and the fields of exploitation in the company&#8217;s agreement or articles. Also address the creator&#8217;s moral rights and check whether the code contains open-source components with license restrictions.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>What risks arise if the person contributing software is not the person who created the code?<\/strong> If you acquired the rights from someone else, verify that the copyright transfer agreement was valid, covers a sufficient scope of rights and does not prohibit further transfers. Without this verification, the creator may challenge the contribution, leading to a claim for remuneration for unauthorized use or a demand to stop using the software.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Is it worth entering into a separate contribution agreement, or is the company&#8217;s agreement or articles enough?<\/strong> Lawyers disagree about whether transferring rights in the company&#8217;s agreement or articles alone is sufficient. The recommendation is clear: enter into a separate contribution agreement. It reduces the risk of problems at the registry court and of a challenge during due diligence, and gives the company better control over IP rights in response to third-party claims.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>How should fields of exploitation be described to avoid a dispute about the scope of software rights?<\/strong> Specify the fields directly in the company&#8217;s agreement or articles. Merely stating that you contribute \u201csoftware created by the contributor\u201d may be insufficient. Describe them so the company can profit from, dispose of, including by selling or licensing, and develop the software. Also reserve a right of first refusal or priority to acquire new fields of exploitation, because a transfer covers only fields known when the agreement is concluded.<\/p>\n<p>&nbsp;<\/p>\n<p><strong>Can open-source components prevent software from being contributed to a company?<\/strong> Yes. If the software uses open-source components, specific license restrictions may make it more difficult or impossible to contribute it. Before making the contribution, verify the software components and identify all open-source components and their license terms.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>How to contribute software rights to a company, document the transfer and define fields of exploitation while managing the main legal risks.<\/p>\n","protected":false},"author":3,"featured_media":1808,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","sip_alt_url":"","sip_en_pl_url":"","sip_pair_uuid":"","sip_pair_state":""},"categories":[1577],"tags":[1538,1556,1537,1543],"specialization":[1211],"practice_area":[],"class_list":["post-3936","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-it-ai-ip-law","tag-copyright-law","tag-corporate-law","tag-intellectual-property-en","tag-it-ai-and-ip-law","specialization-it-ai-ip-law"],"acf":[],"_links":{"self":[{"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/posts\/3936","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/comments?post=3936"}],"version-history":[{"count":1,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/posts\/3936\/revisions"}],"predecessor-version":[{"id":4130,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/posts\/3936\/revisions\/4130"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/media\/1808"}],"wp:attachment":[{"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/media?parent=3936"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/categories?post=3936"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/tags?post=3936"},{"taxonomy":"specialization","embeddable":true,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/specialization?post=3936"},{"taxonomy":"practice_area","embeddable":true,"href":"https:\/\/sawaryn.com\/en\/wp-json\/wp\/v2\/practice_area?post=3936"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}