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Equity Split Agreement

Equity Split Agreement Template for Pakistan

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Key Requirements PROMPT example:

Equity Split Agreement

"I need an Equity Split Agreement for my Lahore-based technology startup, allocating 60% ownership to me as the founder, 25% split between three key developers, and 15% reserved for future investors, with a vesting schedule starting March 2025."

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Document background
The Equity Split Agreement is a crucial document used in Pakistani business contexts when establishing or modifying the ownership structure of a company. It is particularly relevant for startups, family businesses, professional partnerships, and companies bringing in new investors or implementing employee share schemes. The agreement must comply with the Companies Act 2017 and other relevant Pakistani corporate laws, while addressing key aspects such as share allocation, voting rights, transfer restrictions, and shareholder protections. This document is essential for preventing future disputes by clearly documenting the agreed terms of ownership and establishing governance frameworks that align with Pakistani legal requirements and business practices.
Suggested Sections

1. Parties: Identification of all parties to the agreement, including full legal names and addresses

2. Background: Context of the agreement, including current ownership structure and reason for equity split

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

4. Equity Split Structure: Detailed breakdown of the agreed equity distribution, including percentages and number of shares

5. Consideration: Details of any payment or other consideration for the equity allocation

6. Implementation: Process and timeline for implementing the equity split

7. Representations and Warranties: Standard representations and warranties from all parties

8. Shareholders' Rights: Basic rights attached to the shares, including voting and dividend rights

9. Transfer Restrictions: Limitations on the transfer of shares and right of first refusal provisions

10. Confidentiality: Obligations regarding confidential information

11. Governing Law and Jurisdiction: Specification of Pakistani law as governing law and jurisdiction for disputes

12. Execution: Signature blocks and execution formalities

Optional Sections

1. Tag-Along Rights: Optional section for minority shareholder protection, allowing them to join in sales by majority shareholders

2. Drag-Along Rights: Optional section allowing majority shareholders to force minorities to join in a sale

3. Anti-Dilution Provisions: Protection against dilution in case of future share issuances

4. Board Representation: Rights of parties to appoint board members, if applicable

5. Vesting Schedule: If equity is subject to vesting, details of the vesting schedule and conditions

6. Foreign Investment Provisions: Special provisions required if any party is a foreign entity

7. Exit Rights: Specific provisions regarding future exit opportunities or IPO

8. Dead-Lock Resolution: Mechanisms for resolving deadlocks in decision-making

Suggested Schedules

1. Schedule 1 - Share Allocation Table: Detailed breakdown of share numbers, classes, and percentages

2. Schedule 2 - Deed of Adherence: Template for future shareholders to agree to the terms of the agreement

3. Schedule 3 - Company Information: Current company details, registration numbers, and share capital structure

4. Schedule 4 - Vesting Schedule: If applicable, detailed vesting timeline and conditions

5. Schedule 5 - Reserved Matters: List of decisions requiring special majority or unanimous consent

6. Appendix A - Shareholders' Resolution: Draft shareholders' resolution approving the equity split

7. Appendix B - Board Resolution: Draft board resolution approving the equity split

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
Articles of Association
Board
Business Day
Companies Act
Company
Completion Date
Confidential Information
Deed of Adherence
Directors
Drag-Along Notice
Drag-Along Rights
Encumbrance
Equity Securities
Event of Default
Exit Event
Fair Market Value
Financial Year
Fully Diluted Share Capital
Governing Law
Initial Public Offering
Majority Shareholders
Material Adverse Effect
Memorandum of Association
New Securities
Ordinary Shares
Original Shareholders
Parties
Pre-emptive Rights
Preference Shares
Pro Rata Share
Reserved Matters
Right of First Refusal
SECP
Share Capital
Shareholders
Shareholders Agreement
Shares
Tag-Along Notice
Tag-Along Rights
Transfer
Transferee
Transferor
Valuation
Vesting Period
Vesting Schedule
Relevant Industries

Technology

Professional Services

Manufacturing

Real Estate

Financial Services

E-commerce

Healthcare

Education

Retail

Consulting

Family Business

Startups

Small and Medium Enterprises

Agriculture

Mining

Relevant Teams

Legal

Finance

Corporate Secretariat

Executive Leadership

Board of Directors

Compliance

Corporate Development

Shareholder Relations

Investment

Corporate Governance

Relevant Roles

Chief Executive Officer

Managing Director

Company Secretary

Chief Financial Officer

Legal Counsel

Corporate Lawyer

Investment Manager

Business Development Director

Founding Partner

Board Member

Shareholder Relations Manager

Compliance Officer

Finance Director

Corporate Governance Officer

Equity Partner

Industries
Companies Act 2017: Primary legislation governing company formation, operation, and share distribution in Pakistan. Covers issuance of shares, rights of shareholders, and corporate governance requirements.
Securities Act 2015: Regulates securities transactions, including share transfers and documentation requirements for equity arrangements in Pakistani companies.
Contract Act 1872: Fundamental law governing contract formation and enforcement in Pakistan, ensuring the equity split agreement meets basic contractual requirements.
Income Tax Ordinance 2001: Governs taxation implications of equity transfers and ownership, including capital gains tax considerations for share transfers.
Partnership Act 1932: Relevant for understanding rights and obligations between equity holders, particularly in closely-held companies.
Foreign Exchange Regulation Act 1947: Important if any equity holders are foreign entities or individuals, governing foreign investment and ownership in Pakistani companies.
Securities and Exchange Commission of Pakistan Act 1997: Establishes regulatory framework for corporate sector and securities market supervision, affecting equity arrangements and documentation.
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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