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Equity For Services Agreement

Equity For Services Agreement Template for India

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Key Requirements PROMPT example:

Equity For Services Agreement

"I need an Equity For Services Agreement for a software development company engaging a senior technical architect who will provide development and architecture services in exchange for 3% equity, with quarterly vesting over two years starting March 2025 and including IP assignment clauses."

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Document background
The Equity For Services Agreement is a strategic document used when companies, particularly startups and growth-stage businesses in India, seek to engage service providers while conserving cash resources. This agreement type is governed by Indian law and must comply with the Companies Act 2013, SEBI regulations, and other relevant legislation. It's commonly employed when engaging long-term consultants, advisory services, or specialized service providers where aligning interests through equity ownership is beneficial. The document details service specifications, equity compensation terms, vesting schedules, performance metrics, and necessary corporate approvals. It's particularly relevant in scenarios where the service provider's contribution is expected to significantly impact company value, making equity participation a mutually beneficial arrangement.
Suggested Sections

1. Parties: Identification of the service provider and the company, including their legal status and registered addresses

2. Background: Context of the agreement, including the company's need for services and the basis for equity compensation

3. Definitions: Definitions of key terms used throughout the agreement

4. Scope of Services: Detailed description of services to be provided, including deliverables and timelines

5. Equity Compensation: Details of equity to be issued, including number of shares, class of shares, and vesting schedule

6. Service Terms and Conditions: Terms governing the provision of services, including quality standards and reporting requirements

7. Representations and Warranties: Standard representations from both parties regarding capacity, authority, and compliance

8. Corporate Approvals and Compliance: Required approvals for equity issuance and compliance with applicable laws

9. Term and Termination: Duration of the agreement and circumstances for termination

10. Confidentiality: Obligations regarding confidential information

11. Dispute Resolution: Process for resolving disputes, including jurisdiction and governing law

12. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment

Optional Sections

1. Intellectual Property Rights: Ownership and transfer of IP created during service provision - include when services involve creation of intellectual property

2. Non-Compete and Non-Solicitation: Restrictions on competitive activities - include for strategic service providers or key personnel

3. Performance Metrics: Specific KPIs and measurement criteria - include when equity vesting is tied to performance

4. Board Representation: Rights to board seat or observer status - include for strategic service providers receiving substantial equity

5. Tag-Along and Drag-Along Rights: Share transfer rights and obligations - include when service provider receives significant equity stake

6. Exit Rights: Provisions for equity liquidation - include when service provider needs specific exit assurances

7. Insurance and Indemnification: Coverage requirements and indemnity provisions - include for high-risk services

Suggested Schedules

1. Schedule A - Service Specifications: Detailed scope of work, deliverables, and timelines

2. Schedule B - Equity Terms: Detailed terms of equity issuance, including vesting schedule and conditions

3. Schedule C - Performance Criteria: Specific metrics and targets for service evaluation

4. Schedule D - Company Cap Table: Current and post-issuance capitalization table

5. Schedule E - Required Approvals: List of necessary corporate and regulatory approvals

6. Appendix 1 - Share Certificate Format: Template for share certificates to be issued

7. Appendix 2 - Service Reports: Templates for regular service reporting

8. Appendix 3 - Compliance Checklist: List of regulatory compliance requirements

Authors

Alex Denne

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Applicable Law
Board
Business Day
Commencement Date
Company
Confidential Information
Deliverables
Effective Date
Equity Shares
Fair Market Value
Force Majeure Event
Intellectual Property Rights
Key Personnel
Material Adverse Effect
Performance Criteria
Related Party
Services
Service Provider
Share Certificate
Shareholders Agreement
Sweat Equity Shares
Term
Termination Date
Vesting Date
Vesting Period
Vesting Schedule
Working Hours
Work Product
Articles of Association
Memorandum of Association
Board Resolution
Shareholders Resolution
Completion
Financial Year
Quarter
Service Standards
Success Criteria
Valuation
Voting Rights
Transfer
Encumbrance
Dispute
Governing Law
Jurisdiction
Clauses
Interpretation
Appointment
Scope of Services
Service Provider Obligations
Company Obligations
Equity Issuance
Vesting
Share Rights
Performance Requirements
Representations and Warranties
Corporate Governance
Confidentiality
Intellectual Property
Non-Compete
Non-Solicitation
Term and Duration
Termination
Force Majeure
Assignment
Compliance
Regulatory Approvals
Share Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Board Representation
Information Rights
Dispute Resolution
Governing Law
Notices
Indemnification
Amendment
Entire Agreement
Severability
Waiver
Costs
Further Assurance
Independent Contractor
Tax Matters
Insurance
Exit Rights
Relevant Industries

Technology

Professional Services

Consulting

Software Development

Digital Marketing

Business Advisory

Financial Services

Healthcare Technology

Education Technology

Creative Services

Management Consulting

Engineering Services

Relevant Teams

Legal

Finance

Corporate Secretarial

Executive Leadership

Human Resources

Corporate Strategy

Operations

Business Development

Compliance

Board of Directors

Relevant Roles

CEO

CFO

General Counsel

Legal Counsel

Company Secretary

Business Development Director

Strategic Consultant

Technical Advisor

Chief Technology Officer

Marketing Director

Financial Advisor

Management Consultant

HR Director

Board Member

Corporate Strategy Director

Operations Director

Industries
Companies Act, 2013: Primary legislation governing company operations in India, including share issuance, share transfer restrictions, and corporate governance requirements
Securities and Exchange Board of India (SEBI) Act, 1992: Regulates securities market and share issuance, particularly relevant for private placement and equity distribution
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India
Income Tax Act, 1961: Governs taxation aspects of equity compensation and services rendered, including provisions for sweat equity
SEBI (Issue of Sweat Equity) Regulations, 2002: Specific regulations governing the issuance of sweat equity shares to employees or directors
The Indian Stamp Act, 1899: Governs stamp duty requirements for share issuance and transfer documents
Foreign Exchange Management Act (FEMA), 1999: Relevant if any foreign nationals are involved in the equity for services 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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