Advisor Share Agreement

This is a simple agreement for the provision of advisory services to an early-stage company, including situations where a formal advisory board is being set up.

The agreement is based on the advisor receiving shares in the company as compensation for services, with no cash payment assumed. Some or all of these shares may be subject to “clawback” if the advisor does not deliver the expected contributions over the agreed period (typically one to two years).

Important points to consider before using this agreement:

• Advisors should obtain professional tax advice before entering into the arrangement. Vesting and clawback structures may trigger tax obligations.
• The parties should carefully agree on the percentage of shares subject to vesting and the length of the vesting period.
• Under the Companies Act, 2015 (Kenya), there are restrictions on share buy-backs and repurchases. A company may need explicit authority under its constitution to repurchase shares, and in some cases, a separate buy-back agreement and compliance with statutory limits will be required.
• Your lawyer or company secretary will need to prepare the necessary board and/or shareholder resolutions to give effect to this agreement.
• You should also obtain accounting advice to fully understand the implications.

This document should be used together with the company’s governance documents (e.g. constitution and/or shareholders’ agreement), which should adequately address minority shareholding rights, including pre-emptive rights on share transfers and drag-along provisions.

Using this template

Use of a template by business users is free of charge and is subject to you agreeing to our template terms of use.

Click the link to fill in the agreement details and get your template emailed to you.