Equity Agreement Template for England and Wales

An Equity Agreement sets out the terms under which shareholders own and control parts of a company through shares or stock. It outlines key rights like voting powers, dividend payments, and what happens when someone wants to sell their shares. These agreements are particularly important for UK startups and small businesses looking to bring in new investors or divide ownership between founders.

Beyond just documenting ownership percentages, these agreements protect both majority and minority shareholders under English company law. They typically include provisions for share transfers, pre-emption rights (first refusal on new shares), and tag-along/drag-along clauses that determine how shareholders can join in or be forced to participate in company sales.

Use an Equity Agreement when bringing new shareholders into your company or restructuring ownership between existing shareholders. This becomes essential during funding rounds, when admitting new investors, or setting up employee share schemes. Many UK startups implement these agreements early to avoid costly disputes about ownership rights and control.

The agreement proves particularly valuable during major company changes - like mergers, acquisitions, or when founders exit. It helps protect minority shareholders' interests while giving the company flexibility to raise future capital. Having clear rules about share transfers, voting rights, and dividend payments prevents conflicts and saves significant legal costs down the line.

• Simple Agreement For Equity: Basic framework for straightforward share distributions, ideal for early-stage startups
• Equity Ownership Agreement: Comprehensive agreement detailing full ownership rights and responsibilities
• Phantom Equity Agreement: Creates synthetic equity rights without actual share ownership, common for employee incentives
• Equity Share Contract: Focuses on specific share allocation and transfer terms between parties
• Equity Investment Agreement: Detailed terms for new investors, including investment amounts and shareholder rights

• Company Directors: Responsible for approving and implementing Equity Agreements, ensuring they align with company strategy and governance
• Shareholders: Both existing and incoming shareholders who receive rights and obligations under the agreement
• Corporate Lawyers: Draft and review agreements to ensure compliance with UK company law and protect client interests
• Investment Managers: Negotiate terms when representing institutional investors or venture capital firms
• Company Secretaries: Maintain records and ensure proper execution of agreement terms
• Employees: May become parties when receiving shares through employee share schemes or option plans

• Company Details: Gather current shareholding structure, company registration number, and registered office address
• Shareholder Information: Collect full names, addresses, and existing ownership percentages of all parties
• Share Classes: Define different share types, voting rights, and dividend rights for each class
• Transfer Rules: Decide on share transfer restrictions, pre-emption rights, and drag-along/tag-along provisions
• Valuation Method: Establish how shares will be valued for future transfers or exits
• Board Approvals: Confirm director authorizations and any special resolution requirements
• Documentation: Use our platform to generate a legally compliant agreement that includes all essential elements

• Parties Section: Full legal names, addresses, and company registration details of all shareholders
• Share Details: Precise description of share classes, quantities, and nominal values
• Rights and Obligations: Voting rights, dividend entitlements, and shareholder responsibilities
• Transfer Provisions: Pre-emption rights, transfer restrictions, and valuation mechanisms
• Exit Mechanisms: Tag-along and drag-along rights, plus procedures for company sale
• Governing Law: Explicit statement of English law jurisdiction and dispute resolution process
• Execution Block: Signature sections for all parties, including witness provisions
• Confidentiality Terms: Protection of sensitive company and shareholder information

An Equity Agreement differs significantly from a Simple Agreement for Future Equity (SAFE) in several key aspects. While both deal with company ownership, they serve different purposes and operate under distinct legal frameworks in England & Wales.

• Timing of Rights: Equity Agreements grant immediate shareholding rights, while SAFEs promise future equity upon specific triggering events
• Legal Structure: Equity Agreements create present ownership with voting and dividend rights, whereas SAFEs are essentially convertible instruments without immediate shareholder status
• Complexity: Equity Agreements typically contain more detailed provisions about governance and shareholder relationships, while SAFEs are deliberately simpler investment vehicles
• Valuation Requirements: Equity Agreements need a current company valuation, but SAFEs often defer valuation until a future funding round
• Regulatory Treatment: Equity Agreement holders are immediately registered as shareholders, while SAFE holders remain contractual creditors until conversion