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Consulting For Equity Agreement for the United Kingdom

Consulting For Equity Agreement Template for England and Wales

A Consulting For Equity Agreement under English and Welsh law is a legally binding contract where a consultant provides professional services in exchange for company equity instead of, or in addition to, cash compensation. This agreement details the scope of consulting services, equity structure, vesting schedules, and associated rights and obligations. It's particularly relevant for early-stage companies and startups operating in England and Wales who want to leverage external expertise while preserving cash resources.

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What is a Consulting For Equity Agreement?

The Consulting For Equity Agreement is designed for situations where companies, particularly in England and Wales, seek to engage professional expertise without significant cash expenditure. This document structure emerged from the startup ecosystem's need to access high-quality consulting while preserving capital. The agreement typically includes detailed provisions for service scope, equity compensation structure, vesting schedules, performance metrics, and protection of intellectual property. It's particularly valuable for early-stage companies looking to leverage external expertise for growth while aligning consultant interests with company success through equity ownership.

What sections should be included in a Consulting For Equity Agreement?

1. Parties: Identification and details of the contracting parties

2. Background: Context and purpose of the agreement

3. Definitions: Key terms used throughout the agreement

4. Scope of Services: Detailed description of consulting services to be provided

5. Equity Compensation: Details of equity structure, vesting schedule, and conditions

6. Term and Termination: Duration of agreement and termination provisions

7. Confidentiality: Protection of sensitive information

8. Intellectual Property: Ownership and rights to created IP

What sections are optional to include in a Consulting For Equity Agreement?

1. Non-Competition: Restrictions on competitive activities - include when protecting business interests is crucial

2. Performance Metrics: Specific targets or milestones - include when equity is tied to performance

3. Board Observer Rights: Rights to attend board meetings - include for significant equity stakes

4. Tag-Along Rights: Rights to join in sale of shares - include for substantial equity positions

What schedules should be included in a Consulting For Equity Agreement?

1. Schedule of Services: Detailed breakdown of consulting services

2. Equity Structure: Details of share class, rights, and vesting schedule

3. Performance Criteria: Specific metrics and targets if applicable

4. Form of Share Certificate: Template for share certification

5. Shareholders' Agreement: Reference to or incorporation of shareholders' rights

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions






























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Industries

Companies Act 2006: Primary legislation governing company operations including share issuance, directors' duties, share capital requirements, registration of share transfers, and disclosure requirements

Financial Services and Markets Act 2000: Regulates financial promotions and share offerings, relevant for equity arrangements and their compliance with financial services regulations

Employment Rights Act 1996: Ensures proper classification of consultants vs employees and defines associated rights and obligations in the working relationship

Income Tax Act 2007 and Corporation Tax Act 2009: Governs tax implications of equity compensation, treatment of shares as income, and EMI (Enterprise Management Incentive) considerations

Value Added Tax Act 1994: Covers VAT implications of consulting services and the treatment of equity as consideration for services rendered

National Insurance Contributions Act 2014: Addresses National Insurance Contributions implications for equity compensation arrangements

Data Protection Act 2018 and UK GDPR: Ensures compliance with data protection requirements for personal information exchanged during the consulting relationship

Contracts (Rights of Third Parties) Act 1999: Governs how third-party rights are handled in contractual arrangements

Small Business, Enterprise and Employment Act 2015: Contains requirements for maintaining a PSC (People with Significant Control) register when shares are issued

Financial Services Act 2012: Ensures compliance with regulatory requirements for any regulated activities involved in the equity arrangement

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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