Is there any moonlighting law in India which prevents one to own a software company while working for another?

I got an offer to join a software product development company. I was thiking of incorporating a company in India and be one of the directors. This new company is in a different domain (web 2.0 technology - socal networking, job search, education etc) than the company that offered me the Job.

I would like to know if there are any India laws that prevent me from incorporating the company and be the majority stakeholder.

How should I take this up with the prospective employer? Do I need to get written permission from them? Are there any Intellectual Property issues that I need to worry about? As far as I am concerned, there would be no conflict of interest or competition between my company and my prospective employer.

Suggestions?

This might be the best thought out question here in a long time.

I have been a Sr Manager in Silicon Valley startups, and now advise them so I understand your question completely.

It helps that the 2 companies are in different domains, but do you have non-compete responsibilities with the two? How about fiduciary responsibilities? Can it be foreseen that the application areas will remain separate? Could the companies conceivably be seen to be partners or customers of each other by a reasonable but informed person? could you really keep the processes you learn at one place separate from the other? What if it is something as simple as good techniques to use (or not use!) in configuration management? That could be considered proprietary information.

Not saying it is not possible to do this, but these are all areas I would think about carefully and maybe seek legal advice, because it ultimately will not be YOUR decision about if there are conflicts that counts - it will be a court's!

As a Director of the startup, you will be putting your company's IP and financial footing at risk with every decision you make - don't discount the importance of getting this one exactly right!

Once you get to a certain finance stage, the agreements management has or doesn't have in place are most certainly going to be looked at during the due diligence phase. any omissions may cost you the financing and opportunities and you might never know exactly why.

I'd doubt there's anything defined by statute, but your employer may sue for damages if there is a bona fide conflict of interest and there are actual damages.