Consultancy agreement: company (project-based)

This Consultancy Agreement template is for the appointment by the client of a service company to provide consultancy services in relation to a specific project. The agreement will terminate once the project has been completed.

When do I use this document?

This is a Consultancy agreement for the appointment of a service company to provide consultancy services for specific project. The services will be carried out by a named individual, with the consulting company agreeing to ensure that the individual provides the services

Use this document:

for the appointment of an individual to provide consulting services through a service company
for the appointment of a consultant for a specific project

What are the key features?

24 clauses over 15 pages
project-based appointment
framework for project milestones and timeframes
service performance obligations on the consultant
consulting fees on the basis of achievement of project milestones
ownership of intellectual property rights arising from the services
status of the consultant as an independent contractor
early termination for breach and other circumstances

Is there anything else I need to know?

Often, this type of Consultancy Agreement is also accompanied by a letter from the named individual to the client. This will contain undertakings from the individual directly to the client covering the following:

that the individual owns the service company and will continue to do so
that the individual will be employed by the service company by the individual
that the client will own intellectual property rights in materials/work product generated by the individual
that the individual will be responsible for the service company’s performance of the consultancy agreement

We have a form of this side letter available

Consultancy Agreement: company (individual side letter).

What other documents are available?

For a form of consultancy for a service company on a time basis, see

Consultancy Agreement: company (time-based).

For forms of consultancy agreement with an individual consultant, see

Description

When do I use this document?

to sub-divide issued shares into a larger number of shares
to consolidated issued shares into a smaller number of shares
typically, on closing of an investment transaction or in connection with an issue of new shares
if the resolution is to be approved at a general meeting, in conjunction with our template general meeting notice Shareholder meeting notice

What are the key features?

ordinary resolution to be passed as a written resolution
alternative forms of the resolution depending on whether the issued shares are being sub-divided or consolidated

What else do I need to know?

A private limited company can alter its share capital in various ways, including:

sub-division: sub-dividing issued shares into shares of a smaller nominal amount
consolidation: consolidating issued shares into shares of a larger nominal amount

Other types of share capital alteration include the allotment of new shares, reduction of capital, redemption or purchase of own shares and converting issued shares into shares of a different class.

Why would a company sub-divide shares?

Companies are often incorporated with a small number of ordinary shares. If the company plans to issue new shares, such as during an investment round, it may need to sub-divide the existing shares so that the numbers and percentages align with the investment terms.

For example, a company incorporated with 2 shares of £1.00 each will need to sub-divide them if it receives investment for 20% of the enlarged share capital.

To achieve the correct percentage shareholdings, one way of doing this would be to sub-divide the existing 2 shares of £1.00 each into 4 shares of £.0.50 each. The investor could then subscribe for 1 share of £0.50 and would own 1 out of the 5 shares in total, equal to 20% of the enlarged share capital.

Another idea would be to sub-divide the existing shares into a much smaller nominal share value as this will facilitate future shares issues and share transfers.

How does a company sub-divide its shares?

Sub-dividing shares requires an ordinary resolution of shareholders unless the Articles of Association exclude or restrict this. If such exclusions or restrictions exist, the Articles must be amended by special resolution to disapply the exclusion or restriction. After passing the ordinary resolution, the company will need to file Companies House Form SH02 within one month.

Why would a company consolidate shares?

Share consolidation is the reverse of sub-division, where a specified number of existing shares are consolidated into a single share or fewer shares.

Private limited companies are less likely to carry out a consolidation than a public company, which may do this to increase its traded share price or perhaps to reduce the number of shareholders on its register.

If a private company wished to consolidate its share capital, this requires an ordinary resolution of shareholders, unless the Articles of Association exclude or restrict this right. After passing the ordinary resolution, the company will need to file Companies House Form SH02 within one month.

Explanatory Guides

As with all of our document templates, your purchase will include access to clear explanatory guidance on the document and its use.

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Updated by a lawyer on 03/09/2024

Updated By a lawyer on 01/05/2023

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