Coworking spaces look simple from the outside – shared desks, meeting rooms, fast Wi-Fi. The businesses running them know how much is quietly holding that up. Every new city brings a different interpretation of land use, a different set of labour registrations, and a licensing process that was almost certainly designed with some other kind of business in mind.
In this conversation with ETLegalWorld’s Manashvi Tripathi, Awfis Head of Legal Sonakshi Sharma talks about how Awfis handles compliance across jurisdictions with their own rules and interpretations, what the proposed legalisation of coworking spaces in Delhi could actually mean on the ground, and why the workspace contracts startups sign in their early days often become a problem when it matters most.
Manashvi Tripathi: How does Awfis ensure comprehensive regulatory compliance across its coworking centres, including labour laws, Shops and Establishments Acts, and state-specific laws?
Sonakshi Sharma: At Awfis, we approach regulatory compliance not as a back-end administrative function, but as a strategic business enabler — one that underpins operational integrity and stakeholder trust across our expanding footprint.
With a presence spanning 18 cities and 200+ centres, we have instituted a centralized-yet-localized compliance framework that balances enterprise-wide consistency with the nuance required to address state-specific regulatory landscapes.
Our core compliance governance is centrally administered through a proprietary, technology-enabled Compliance Tool, developed in-house, which integrates automated workflows, periodic audits, and cross-functional accountability mechanisms, supported by dedicated modules for both statutory and internal compliances.
The platform has been progressively strengthened with enhanced tracking, monitoring, and control capabilities to enable proactive risk mitigation and ensure continuous regulatory adherence. Region-wise and centre-specific repository features further augment operational visibility and on-ground accessibility for our teams.
At the execution level, compliance processes are carefully tailored to meet jurisdiction-specific mandates, encompassing Trade Licenses, Shops and Establishments registrations, applicable labour law compliances, fire and safety norms, and other state-prescribed requirements, ensuring that each of our coworking centres operates in regulatory compliance, wherever we are present.
Manashvi Tripathi: How has the lack of legal recognition for co-working spaces in Delhi impacted Awfis operations, and what specific changes do you anticipate from the government’s legalisation proposal?
Sonakshi Sharma: The absence of formal legal recognition for coworking spaces in Delhi has historically presented operational challenges — particularly around licensing, commercial usage classifications, and obtaining requisite operational permissions. This regulatory gap has, at times, resulted in approval-related uncertainties, processing delays, and inconsistent enforcement on the ground, creating friction for operators such as ourselves.
A structural constraint that has particularly impacted expansion in Delhi is the limited availability of permissible zones for establishing coworking centres, owing to prevailing restrictions on land use and building usage classifications.
We view the government’s proposal to formally recognise and legalise coworking spaces as a significant and welcome development for the industry. Specifically, the inclusion of coworking spaces within the definition of ‘incubators’, and the potential extension of relaxations to institutional spaces for coworking use, could meaningfully expand the operational canvas for flex-space operators — enabling better utilisation of existing infrastructure across the city. Further, labour law relaxations permitting 24/7 operations — subject, of course, to appropriate safety and security frameworks — could catalyse employment generation, reinforce Delhi’s positioning as a technology and innovation hub, and create a compelling ecosystem for both domestic and international occupiers.
From a regulatory standpoint, we anticipate these reforms will deliver greater compliance clarity, standardised licensing frameworks, and a demonstrably improved ease of doing business. The legalisation initiative is also expected to bolster investor confidence and streamline registration and operational processes for flex-space operators and their occupiers — most notably start-ups, for whom access to premium, amenity-rich workspaces with facilities such as meeting rooms has traditionally been constrained by the economics of conventional leased office arrangements.
Should the proposed financial support mechanisms materialise, such spaces would become far more accessible to emerging enterprises, incentivising greater start-up registrations and activity in Delhi.
Manashvi Tripathi: What role does the legal team play in aligning with recent data protection requirements under the DPDP Act for shared workspaces handling client data? What measures address employee privacy and surveillance in hybrid setups?
Sonakshi Sharma: The legal function at Awfis occupies a central role in shaping and continuously strengthening our data governance framework, particularly in light of the evolving obligations introduced under the Digital Personal Data Protection (DPDP) Act. Given the nature of shared workspaces — where significant volumes of client, employee, visitor, and operational data are handled across multiple touchpoints — privacy governance is not a peripheral concern for us; it is a core operational and legal priority.
We work in close collaboration with our IT, HR, and other relevant functions to embed privacy-by-design principles across our systems, processes, and contractual arrangements. Our data governance architecture is built around several key pillars:
Firstly, contractual safeguards — ensuring appropriate data processing obligations are captured in agreements with clients, vendors, and service partners;
Secondly, role-based access controls — designed on a strict need-to-know basis to limit data exposure to only those with a legitimate operational requirement;
Thirdly, data retention and deletion protocols — governing the lifecycle of personal data in a manner consistent with DPDP principles; and
Lastly, vendor accountability frameworks — establishing clear responsibilities and obligations for third parties who process data on our behalf.
In hybrid work environments, we remain particularly mindful of the imperative to balance productivity monitoring with employee privacy rights — a nuanced space that demands careful calibration. Our approach is anchored in transparent employee notices, purpose-limited and proportionate data collection, and clearly defined internal governance policies. Surveillance measures, where employed, are designed to be limited in scope, justified by legitimate operational needs, and ensuring that efficiency objectives are pursued without compromising individual privacy rights.
Manashvi Tripathi: What are the common contractual challenges in flexible workspace agreements with clients, landlords, and vendors, and how do you manage them?
Sonakshi Sharma: Flexible workspace agreements occupy a distinctly complex contractual space. Unlike conventional leasing or standalone service arrangements, these agreements are inherently bundled in nature — integrating elements of real estate, technology, hospitality, and operational management within a single contractual framework. This multi-dimensional character gives rise to a unique set of challenges that require careful structuring and proactive risk management across all three tiers of our contracting ecosystem — clients, landlords, and vendors.
Across these engagements, the most recurring contractual challenges we navigate include:
1. Allocation of liability — particularly in scenarios involving service disruptions, asset damage, or third-party claims in a shared environment;
2. Exit and termination rights — balancing the flexibility expectations of occupiers with the commercial commitments we carry at the asset level;
3. Lock-in structures — structuring tenure obligations in a manner that is commercially viable for Awfis while remaining attractive to clients seeking agility;
4. Service-level expectations and breach consequences — defining measurable, operationally realistic SLAs and proportionate remedies that do not expose either party to disproportionate risk;
5. Force majeure and operational disruptions — addressing events outside the reasonable control of either party in a manner that is equitable and legally sound.
In our landlord negotiations specifically, key points of deliberation typically include commercial protections, fit-out cost obligations, exclusivity arrangements within a given catchment or asset, and the preservation of scalability rights to accommodate future growth and portfolio expansion.
To mitigate these challenges systematically, our approach is built on three foundational pillars: standardized contracting frameworks that bring consistency and reduce negotiation friction; risk-tiered negotiation playbooks that enable our teams to calibrate positions based on deal complexity, counterparty profile, and commercial exposure; and clearly defined governance structures that delineate operational and legal responsibilities across stakeholders. Throughout, our focus remains on achieving arrangements that are not merely legally defensible, but commercially practical and operationally sustainable for all parties involved.
Manashvi Tripathi: Looking ahead, what legal trends in flexible workspaces do you anticipate impacting the sector?
Sonakshi Sharma: The flexible workspace sector stands at an inflection point, and from a legal and regulatory standpoint, several significant trends are poised to reshape the operating landscape in the years ahead.
1. Data Privacy and Cybersecurity — Regulatory obligations in this space are expected to become considerably more stringent, with direct implications for how workspace operators manage technology infrastructure, handle occupier data, and structure vendor accountability frameworks. As shared environments handle increasingly sensitive data across a diverse occupier base, compliance with evolving data protection legislation will require continuous investment in governance architecture and operational controls.
2. ESG-Linked Compliance and Sustainability Reporting — There is a discernible and growing emphasis on environmental, social, and governance obligations, particularly amongst enterprise occupiers and institutional investors who are themselves subject to sustainability reporting requirements. This is already manifesting in occupier preferences — recent industry research by Colliers indicates that approximately 70% of flex space uptake over the last two to three years has been concentrated in green-certified developments, underscoring the extent to which sustainability considerations have moved from aspiration to procurement criteria. Workplace safety standards are similarly expected to attract heightened regulatory and institutional scrutiny.
3. Regulatory Standardisation of the Flex-Space Model — The sector has long operated in a degree of regulatory ambiguity, and we anticipate a period of progressive clarification, with clearer norms emerging around licensing frameworks, taxation treatment, and commercial occupancy classifications for coworking and managed office operators. This standardisation, whilst introducing new compliance obligations, is ultimately a positive development — bringing greater certainty and legitimacy to the sector.
4. Extension of IT/ITeS-Linked Benefits and Policy Recognition — Perhaps most consequentially for operators such as Awfis, we anticipate a growing policy focus on extending IT/ITeS-linked benefits and formal regulatory recognition to coworking and managed office operators across states. This could encompass electricity cost benefits, zoning relaxations, simplified compliance frameworks, and infrastructure incentives — measures that would substantially enhance operational flexibility, reduce the cost of compliance, and provide a meaningful structural tailwind for long-term sectoral growth.
Collectively, these trends reinforce the imperative for legal functions within the flex-space sector to remain forward-looking, deeply engaged with regulatory developments, and genuinely integrated into business strategy, ensuring that compliance readiness translates into competitive advantage.
Manashvi Tripathi: Any advice for startups navigating legal hurdles in shared office models?
Sonakshi Sharma: My foremost advice to startups would be this: invest early in building strong legal, compliance, and financial governance frameworks. The instinct at the early stage is often to defer these foundations in favour of speed and growth — but in our experience, the absence of robust governance architecture creates compounding risks that become significantly more costly and complex to resolve as the business scales.
Practically, this means implementing standardised documentation, well-structured contracts, and proactive regulatory practices from the outset, not as administrative exercises, but as genuine enablers of operational resilience and long-term sustainability.
When entering shared office or flex-space arrangements specifically, startups should approach the commercial and legal terms with considerably more rigour than is often applied at this stage. Key considerations include:
1. Expansion rights — ensuring the arrangement accommodates growth without requiring a complete renegotiation or relocation;
2. Exit flexibility and lock-in obligations — understanding precisely what commercial commitments are being undertaken and what the cost and process of exit entails;
3. Assignment and transfer rights — particularly critical for high-growth businesses that may undergo mergers, acquisitions, or structural reorganisation, where the ability to assign or transfer workspace arrangements without operator consent can be the difference between a smooth transaction and a significant operational constraint;
4. Allocation of operational liabilities — clarity on where responsibility sits in the event of service disruptions, property-related incidents, or third-party claims within a shared environment; and
5. Migration and relocation risks — a dimension that is frequently overlooked at the contracting stage. Any change of premises carries regulatory and compliance implications, including the need to update statutory registrations, tax registrations, business licences, and a range of address-linked compliances. Startups should factor these transition costs — both financial and operational — into their decision-making.
For businesses in an active growth phase, I would specifically recommend negotiating rights of first refusal for future expansion at comparable commercial terms, as well as assignment and transfer rights that expressly contemplate corporate restructuring events. These provisions may appear premature at the time of signing, but they are considerably easier to secure at the outset than to negotiate retrospectively when the business is in the midst of a time-sensitive transaction or expansion.
In summary — approach your workspace arrangement not merely as a real estate decision, but as a commercial and legal commitment that will have downstream implications for your compliance posture, operational agility, and growth trajectory. The time invested in getting these foundations right is invariably well spent.
