Share Investment Agreement (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 into the company. In this Agreement the investor agrees to “invest” his time and expertise in the provision of a particular service to the company, following the successful completion of which, the investor will receive shares in the company.
This document has been updated for Brexit. References to data protection legislation have been updated with reference to the UK GDPR.
Particularly for start-ups, a business may want/need to bring someone into the business in order to provide a particular skill or expertise; however the business may not be in a position to provide that person with their usual cash fee. One way around this is to offer that person the opportunity to “invest” in the company in return for the provision of the particular service. This is often known as a “sweat equity” arrangement. Shares are awarded to the “investor” in consideration of their time, knowledge and skill contributed. Unlike financial equity, whereby the participant or investor pays for the shares in cash, this arrangement reflects the person’s human contribution to the company – the value of which will need to be agreed by the parties concerned.
This sweat equity arrangement is structured so that the investor provides the service to the company in return for the allotment of new shares only once the company is satisfied that the performance of the services has been properly carried out. This agreement also anticipates that the parties will look to enter into a full shareholders’ agreement at the end of the term of the services.
This template has been drafted with a new/start-up business in mind and does not consider the potential tax or accounting implications of making such an investment.
This Share Investment Agreement for Services includes the following clauses:
1. Definitions & Interpretation
3. Fees & Expenses
4. Subscription Shares & Completion
5. Other Activities
6. Confidential Information
7. Data Protection
8. Intellectual Property
10. Obligations on Termination
13. Entire Agreement
15. No partnership
18. Governing law & jurisdiction
Schedule 1 The Existing Shareholders
Schedule 2 The Investor
Schedule 3 Particulars of the Company
Schedule 4 Service Milestones
This document is in open format. Fields should be completed and wording in square brackets is optional and can be deleted or retained according to requirements.
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