Shareholder operational services agreement template
Agreement for a shareholder to provide operational and administrative services to a company, often used where a joint venture company will, for efficiency reasons, use the resources and infrastructure of one of its shareholders.
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When do I use this document?
- for a services agreement between a shareholder and a joint venture company
- for a range of services, including office facilities, IT support and accounting, tax and HR services
- for a JV company which is a private limited company incorporated in England and Wales
What are the key features?
- 23 clauses and one schedule over 13 pages
- range of services to be provided, to be adapted to suit the circumstances
- fees and third party costs to be paid to the service provider
- limitations of liability for the service provider
- termination provisions, including the service provider ceasing to be a shareholder in the company
When do I use a shareholder operational services agreement?
A corporate shareholder may agree to provide operational and support services to a company, often as part of a joint venture. The company itself lacks the necessary resources and infrastructure required the operational and administrative tasks and roles.
Operational services that a shareholder may offer include:
- office facilities: desk space, meeting room and associated services
- IT: computer maintenance and support, exchange server products and services, website hosting and maintenance
- accounting: preparation of management accounts and assistance with annual statutory accounts preparation
- tax: assistance with the company’s tax filings and compliance
- personnel: support with payroll, recruitment and HR related matters
- insurance: participation in group insurance schemes and policies
The services may be provided by the shareholder itself through its own resources or by third party providers, often as part of the shareholder’s own services requirements.
When do I use this document?
- as an advance subscription agreement between the company and a single investor
- where the conversion price will be calculated as a percentage discount to the issue price for shares in the qualified investment round
- if agreed, where there is an agreed valuation cap on the company’s valuation
What are the key features?
- advance subscription terms and payment
- conversion on the occurrence of defined events, including a qualifying financing round, the sale of the company or on a longstop date
- conversion price on a qualified financing round to be at an agreed percentage discount to the qualified financing round share price
- if agreed, a cap on the valuation of the company for the purpose of calculating the conversion price
- warranties regarding the investor’s compliance with Financial Services and Markets Act 2000 regime regarding financial promotions
What else do I need to know?
For detailed discussion regarding the purpose of advance subscription agreements and their benefits and disadvantages for investors and the company, click here.
Negotiating points
Prior to entering into this ASA, the parties will need to consider and agree:
- discount rate: the discounted price per share (expressed as a percentage) at which the ASA investor will receive shares in the qualified financing round
- valuation cap: if agreed, the cap on the valuation of the company for the purpose of calculating the price at which the advance subscription will convert into shares on a qualified investment round
- default valuation: the default valuation of the company which will be used to calculate the conversion price of the advance subscription in circumstances where conversion occurs on the agreed longstop date or the company’s insolvency
- longstop date: the longstop date on which (and in the absence of a prior qualifying financing round) the ASA will automatically convert into shares
- qualified financing round: the minimum amount of funding which the company must raise before that funding round will count as the qualified financing round under the ASA which results in the conversion of the advance subscription into shares
- subscription amount: the amount of the investor’s advance subscription
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Updated by a lawyer on 21/07/2025
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