Advisory Shares are a great way to bring on high-level mentors or consultants without paying them a huge cash salary. Instead, you give them equity in exchange for their expertise and time. Because these advisors aren’t full-time employees, the process is slightly different from a standard ESOP.
Service: Advisory Shares
What are Advisory Shares?
Advisory shares are essentially equity compensation given to company advisors—like industry experts, mentors, or strategic consultants—instead of cash. This aligns their interests with yours: if the company grows, their shares become more valuable.
In America, these are often handled via FAST (Founder Advisor Standard Template) agreements. In India, we structure these either as Sweat Equity or through a direct Advisory Agreement coupled with a share issuance.
Advisory Shares vs. ESOPs
While they both involve giving away equity, they serve very different purposes.
| Feature | Advisory Shares | ESOPs (Employee Stock Options) |
| Recipient | External Mentors, Consultants, or Board Members. | Full-time employees of the company. |
| Vesting | Usually shorter (e.g., 1–2 years) or milestone-based. | Longer (usually 3–4 years) to encourage staying long-term. |
| Role | Strategic advice, networking, or specialized “know-how.” | Day-to-day operations and execution. |
| Legal Route | Structured via Advisory Agreements and Share Issuance.
| Structured via a formal ESOP Pool and Scheme.
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How We Structure This for You
We ensure that you don’t give away too much control and that the advisor actually delivers value before they get their shares.
The Advisory Agreement (Legal): Our lawyers draft a clear contract that defines what the advisor will actually do (e.g., “Intro to 5 investors” or “Monthly strategy calls”).
The Vesting Schedule (Legal/CA): We set up “milestone-based” vesting. This means the advisor only gets their shares once they hit specific goals, rather than all at once.
Valuation & Tax (CA): We help you understand the tax impact for the advisor (perquisite tax) and the company.
Issuance (CS): We handle the board resolutions and ROC filings to officially issue the shares once the vesting conditions are met.
Common Terms We Include
The Cliff: A period (e.g., 3 or 6 months) the advisor must complete before any shares start vesting.
Acceleration: What happens to their shares if you sell the company before they are fully vested?
Termination: If the advisor stops helping, we ensure you have the right to “claw back” or stop any future vesting immediately.
How long does it take?
Drafting the Agreement: 3–5 days.
Board Approvals: 2 days.
Total Time: Usually 1 week to have the contract signed and the process locked in.