The Advisory Shares Agreement is commonly used by South African companies seeking to attract and retain high-level advisors by offering equity-based compensation. This document type is particularly relevant for growing businesses that need strategic expertise but may have limited cash resources. The agreement, structured under South African law, details the advisor's role, share vesting schedule, and associated rights while ensuring compliance with local regulatory requirements. It typically includes provisions for protecting company interests through confidentiality clauses and non-compete restrictions, while also safeguarding the advisor's rights to earned equity. The Advisory Shares Agreement must align with the Companies Act 71 of 2008 and consider tax implications under South African law, making it essential for companies to carefully structure these arrangements with appropriate legal guidance.
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1. Parties: Identification of the Company and the Advisor, including full legal names, registration/identification numbers, and addresses
2. Background: Context of the agreement, including the company's desire to engage the advisor and the advisor's qualifications and expertise
3. Definitions: Definitions of key terms used throughout the agreement, including 'Advisory Shares', 'Services', 'Vesting Period', etc.
4. Appointment and Services: Terms of the advisor's appointment and detailed description of advisory services to be provided
5. Advisory Shares: Details of the share allocation, including number of shares, class of shares, and nominal value
6. Vesting Provisions: Schedule and conditions for the vesting of advisory shares, including any performance conditions or time-based vesting
7. Rights and Restrictions: Rights attached to the advisory shares and any restrictions on transfer or sale
8. Advisor's Obligations: Specific duties, commitments, and responsibilities of the advisor
9. Company's Obligations: Company's commitments and responsibilities to the advisor
10. Confidentiality: Provisions regarding the protection of confidential information
11. Duration and Termination: Term of the agreement and circumstances under which it may be terminated
12. Consequences of Termination: Effects of termination on unvested shares and ongoing obligations
13. General Provisions: Standard legal provisions including notices, entire agreement, variation, and governing law
1. Non-Competition: Restrictions on advisor's involvement with competing businesses - include when the advisor has access to sensitive competitive information
2. Tax Indemnity: Provisions regarding tax liability and indemnification - include when tax implications are significant or complex
3. Drag-Along Rights: Rights forcing advisor to sell shares in case of company sale - include for early-stage companies planning future exits
4. Tag-Along Rights: Rights allowing advisor to join in sale of shares by other shareholders - include to protect minority shareholders
5. Board Observer Rights: Rights to attend board meetings - include when advisor provides strategic guidance at board level
6. Dispute Resolution: Specific procedures for resolving disputes - include when parties prefer alternative dispute resolution to litigation
7. Exchange Control Compliance: Specific provisions for compliance with SA exchange control regulations - include when advisor is non-resident
1. Schedule 1: Services Description: Detailed description of advisory services to be provided
2. Schedule 2: Share Terms: Detailed terms and conditions attaching to the advisory shares
3. Schedule 3: Vesting Schedule: Detailed timeline and conditions for share vesting
4. Schedule 4: Company Information: Key company information including share capital structure and existing shareholders
5. Schedule 5: Deed of Adherence: Form of deed to be signed by advisor agreeing to company's shareholders agreement
6. Appendix A: Share Certificate Template: Template for share certificates to be issued
7. Appendix B: Board Resolution: Template board resolution approving share issuance
Relevant legal definitions
Clauses
Relevant Industries
Technology
Financial Services
Healthcare
Mining
Manufacturing
Retail
Professional Services
Education
Real Estate
Energy
Telecommunications
Media & Entertainment
Agriculture
Biotechnology
E-commerce
Relevant Teams
Legal
Finance
Corporate Development
Human Resources
Board of Directors
Executive Management
Company Secretariat
Compliance
Tax
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Legal Counsel
Company Secretary
Board Member
Strategic Advisor
Industry Expert
Technical Advisor
Financial Advisor
Management Consultant
Business Development Director
Operations Director
Investment Manager
Startup Founder
Corporate Development Manager
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