Advisory shares for mentors, consultants, and board members.
Bring on high-level advisors without paying a large cash salary — give equity in exchange for expertise and time. Because advisors aren't full-time employees, the process differs from a standard ESOP.
Advisory shares are equity given to external mentors and consultants, structured with milestone-based vesting — not the longer time-based vesting used for employee ESOPs. In India, these are structured either as Sweat Equity or through a direct Advisory Agreement coupled with share issuance. A well-drafted agreement, cliff, and termination clause are the difference between a fair deal and a costly mistake.
Advisory shares or ESOP — they serve different people.
Both involve giving away equity, but they serve very different purposes and different recipients.
| Feature | Advisory Shares | ESOP |
|---|---|---|
| Recipient | External mentors, consultants, or board members | Full-time employees of the company |
| Vesting | Usually shorter (1–2 years) or milestone-based | Longer (usually 3–4 years) to encourage retention |
| Role | Strategic advice, networking, or specialised know-how | Day-to-day operations and execution |
| Legal route | Advisory Agreement plus share issuance | Formal ESOP pool and scheme |
Three terms that make or break the agreement.
We ensure you don't give away too much control, and that the advisor actually delivers value before their shares vest.
A period (e.g., 3 or 6 months) the advisor must complete before any shares start vesting — protects you from advisors who disengage early.
What happens to their shares if you sell the company before they are fully vested — a clause every acquirer's counsel will ask about.
If the advisor stops helping, you need the right to claw back or stop any future vesting immediately — non-negotiable in every agreement we draft.
Usually 1 week to have the contract signed and locked in.
| Drafting the agreement | 3–5 days Advisory Agreement + vesting schedule |
| Board approvals | 2 days Resolution authorising the arrangement |
| Total time | ~1 week Contract signed and process locked in |
The four steps we handle.
The advisory agreement
Our lawyers draft a clear contract defining what the advisor will actually do — e.g., "intro to 5 investors" or "monthly strategy calls" — so expectations are unambiguous on both sides.
The vesting schedule
We set up milestone-based vesting, so the advisor only gets shares once they hit specific goals, rather than all at once.
Valuation & tax
We help you understand the tax impact for both the advisor (perquisite tax) and the company.
Issuance
We handle the board resolutions and ROC filings to officially issue the shares once vesting conditions are met.
Advisory shares, sweat equity, or an ESOP — which fits?
Common questions about advisory shares.
Can an advisor receive shares without any vesting conditions?
+Are advisory shares the same as sweat equity?
+What happens if we want to end the advisory relationship early?
+How much equity is typical for an advisor?
+Do advisory shares need board approval?
+Ready to bring on an advisor?
Schedule a no-obligation discovery call. We'll draft an agreement that protects your equity and sets clear expectations.
Schedule a consultation Write to rohit@krprassociates.com