Allocating shares to directors at your startup? Here are some useful tips to help you.
If you have launched your startup with another director and with little or no funding, it is likely that you have thought about shares taking the place of a director's service fee, at least in the early stages.
You can get a director's consent so they can receive shares in lieu of a director's service fee.
It's a good idea to get a directors consent in writing to receive shares in lieu of a fee for services in the initial stages. A director's service agreement is a good place to do this.
Are you considering allocating shares to a new director that has come on board after the company has been set up?
While a director does not have to be to shareholder, it does make sense to allocate shares to a director to incentivise them to work towards the long term growth and success of the company.
To complete the share allocation, you may need to refer to your existing constitution or shareholder agreement as they will usually spell out requirements for the share allocation.
We have a bonus for our readers, we have included forms that you may need to complete the allocation. These are:
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