Share Investment Agreement - Shares for Services
This Share Investment Agreement for Services is an alternative investment arrangement to the traditional provision of an equity (share) stake in a company in return for a cash investment.
Under this agreement, the investor “invests” their time and expertise by providing a particular service to the company. Following successful completion of that service, the investor receives shares in the company.
When this type of “sweat equity” arrangement may be used
Particularly for start-ups, a business may want or need to bring someone into the business to provide a particular skill or expertise, but may not be in a position to pay their usual cash fee.
One way around this is to offer that person the opportunity to “invest” in the company by providing the service in return for shares. This is often known as a “sweat equity” arrangement.
Shares are awarded in consideration of the investor’s time, knowledge and skill contributed. The value of that contribution will need to be agreed by the parties.
How the share-for-services structure works in this agreement
This arrangement is structured so that the investor provides the service in return for the allotment of new shares only once the company is satisfied that performance of the services has been properly carried out.
The agreement also anticipates that the parties will look to enter into a full shareholders’ agreement at the end of the term of the services.
What this template does and does not cover
This template has been drafted with a new or start-up business in mind and does not consider the potential tax or accounting implications of making such an investment.
What the agreement covers
The agreement includes provisions dealing with the services, fees and expenses, subscription shares and completion, confidentiality, data protection, intellectual property, termination (and obligations on termination), disputes, and governing law and jurisdiction.
It also includes schedules covering the existing shareholders, the investor, particulars of the company, and service milestones.
Share Investment Agreement - Shares for Services is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.