Document background
The Sweat Equity Agreement is commonly used in Switzerland when companies, particularly startups and growing businesses, want to compensate service providers with ownership stakes rather than cash. This arrangement is particularly valuable when companies are cash-constrained but can offer valuable equity participation. The document must comply with Swiss corporate law, particularly the Swiss Code of Obligations, and address tax implications under Swiss law. It typically includes detailed provisions about the services to be rendered, equity calculation methods, vesting schedules, and corporate governance rights. The agreement is especially relevant in scenarios where long-term alignment between the service provider and company is desired, such as with key consultants, advisors, or early employees. The structure must account for Swiss-specific requirements regarding share issuance, transfer restrictions, and shareholder rights.
