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Amazing experience
After placing an enquiry, I received a call 20 minutes later, and then 2 hours later, I had a solicitor assigned to me. They were absolutely incredible right from the word go - amazing and very prompt with replies, answering all my questions and keeping the process moving. We finally completed today and I am so unbelievably happy. I wouldn’t hesitate to use Lawhive again in the future if needed.
Lily
First class service
I initially made an online enquiry about a tricky conveyancing matter and received an immediate call back. They understood straight away what was needed and gave me a quote that was very reasonable. It was such a pleasure to find someone who was cheerful, professional and completely reassuring as I’d been getting quite anxious about the sale of my house. The service Lawhive has provided is absolutely first class and I cannot recommend them enough.
Charles
Empathetic, professional and efficient
I am an executor, selling my mother's home. I found the assistance I received from Lawhive first rate - empathetic, professional and efficient.
Mark
Great service from Lawhive
We used Lawhive for our conveyancing needs and our solicitor was very helpful, patient and informative. She helped us with our needs with prompt responses and provided a very efficient service.
Kelvin
Great service when you need clarity and calm
Our solicitor was warm, friendly and provided crystal clear communication. A lot of conveyancers assume customers know everything about the process already, so it was really appreciated to hear each stage included in the price given.
Em
Quick and efficient
We used Lawhive for a transfer of property and conveyancing. Our solicitor was so helpful and thorough with the whole process. He responded quickly and efficiently to any questions or requests that we had and explained some of the more complicated issues regarding the process clearly.
Geri
Fantastic service and experience with Lawhive
I had the pleasure of working with Lawhive doing a transfer of equity on a property. Our solicitor’s service was amazing, she responded quickly to any questions or concerns and kept me updated throughout the process. I can strongly recommend her for any conveyancing work that you may need. Fantastic service all round.
Jane
Amazing experience
After placing an enquiry, I received a call 20 minutes later, and then 2 hours later, I had a solicitor assigned to me. They were absolutely incredible right from the word go - amazing and very prompt with replies, answering all my questions and keeping the process moving. We finally completed today and I am so unbelievably happy. I wouldn’t hesitate to use Lawhive again in the future if needed.
Lily
First class service
I initially made an online enquiry about a tricky conveyancing matter and received an immediate call back. They understood straight away what was needed and gave me a quote that was very reasonable. It was such a pleasure to find someone who was cheerful, professional and completely reassuring as I’d been getting quite anxious about the sale of my house. The service Lawhive has provided is absolutely first class and I cannot recommend them enough.
Charles
Empathetic, professional and efficient
I am an executor, selling my mother's home. I found the assistance I received from Lawhive first rate - empathetic, professional and efficient.
Mark
Great service from Lawhive
We used Lawhive for our conveyancing needs and our solicitor was very helpful, patient and informative. She helped us with our needs with prompt responses and provided a very efficient service.
Kelvin
Great service when you need clarity and calm
Our solicitor was warm, friendly and provided crystal clear communication. A lot of conveyancers assume customers know everything about the process already, so it was really appreciated to hear each stage included in the price given.
Em
Quick and efficient
We used Lawhive for a transfer of property and conveyancing. Our solicitor was so helpful and thorough with the whole process. He responded quickly and efficiently to any questions or requests that we had and explained some of the more complicated issues regarding the process clearly.
Geri
Fantastic service and experience with Lawhive
I had the pleasure of working with Lawhive doing a transfer of equity on a property. Our solicitor’s service was amazing, she responded quickly to any questions or concerns and kept me updated throughout the process. I can strongly recommend her for any conveyancing work that you may need. Fantastic service all round.
Jane
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01 overview
When it comes to corporate governance, a well-crafted Director's Service Agreement can ensure directors always put the company's interests first and mitigate risks by setting out consequences for breaches or negligence.
Without a comprehensive Director's Service Agreement, you could be left vulnerable to disputes, legal complications, and uncertainties around directorial roles and obligations.
At Lawhive, our network of corporate lawyers is here to advise on and draft a personalised director's service agreement that protects your business and reduces the likelihood of disputes.
Contact our legal assessment team today for further information and a free fixed-fee quote.
A company director generally holds the legal position of director and has certain statutory and common law duties. Their role can vary depending on the type of director and their specific responsibilities.
Types of directors include:
| Types of Directors | Role Description |
| Executive Directors | Typically involved in the day-to-day operations of the business and often employees of the company. |
| Non-executive directors | Usually not employees of the company and may work part-time to provide impartial advice to the company's board. |
| De facto directors | Act as directors without being formally appointed to the role by the company. |
| Shadow directors | May not be officially recognised as directors but influence the decisions and actions of the board. |
A Directors' Service Agreement (DSA) is a specialised employment contract designed specifically for directors within a company.
Unlike standard employment contracts, DSAs cover basic employment terms and the unique responsibilities, rights, and obligations associated with the directorial role.
They typically include details such as:
DSAs also often address conflicts of interest and post-termination activities to protect the company's interests, like non-compete and non-solicitation clauses.
While a Director's Service Agreement isn't a legal requirement for all companies, we strongly recommend having one for every director to serve as a protective measure and provide clear guidelines and security for the director. Even if a director isn't formally an employee, they might still have a director's service agreement to cover their non-executive duties.
However, non-executive directors commonly agree to terms through a simpler document like a letter of appointment.
A Director's Service Agreement offers several benefits that can strengthen a company's structure and governance.
DSAs clarify the duties and responsibilities of directors, ensuring they understand their roles within the company. This helps align their actions with the company's goals.
DSAs define the legal obligations under the Companies Act and other regulations, ensuring directors comply with their statutory duties. This is important for listed companies where regulatory compliance is closely monitored.
DSAs typically include confidentiality clauses to protect the company's confidential data, safeguarding business strategies and customer information.
DSAs prevent conflicts of interest, making sure directors prioritise the company's interests over personal gains in line with their fiduciary duties.
Including arbitration and mediation clauses helps manage disputes preemptively, saving the company from expensive litigation if disputes arise.
A director's service agreement and a standard employment contract share some similarities but also have key differences.
Both:
However, DSAs are more comprehensive and detailed, not to mention tailored to the specific roles and responsibilities of directors, like corporate governance, fiduciary duties, and strategic decision-making.
DSAs also explicitly reference statutory duties under laws like the UK Companies Act 2006, making sure directors understand and fulfill their legal obligations.
They also may have more rigorous clauses related to compliance, conflicts of interest, and confidentiality compared to standard contracts. They also have complex provisions regarding bonuses, stock options, and other forms of incentive compensation linked to the company's performance, reflecting the director's influence on company success.
A director's service agreement should cover the terms under which directors operate within the company.
A DSA should:
Importantly, each director's service agreement (DSA) should be customised to meet the unique needs of the company and the director's role, considering industry norms, and regulatory standards.
Intellectual property sections in a Director's Service Agreement should outline who owns what regarding ideas and creations made by the director while they're on the job.
The agreement should say that anything the director comes up with while working for the company belongs to the company, including inventions, designs, software, and documents.
The agreement should also cover what happens to the company's IP after the director leaves. Often, there are rules in place to stop them from using company secrets or knowledge in their next job, especially if it could compete with the company.
If the director already had some ideas or creations before they joined the company, the agreement should say who owns those and how they can be used. This stops any arguments later on about who owns what.
And if the director's job involves working with other companies or people, the agreement should say what happens to any IP that's created through those partnerships.
To handle conflicts of interest in a director's service agreement, it's important to make sure directors are upfront about potential conflicts. This means telling the company about any personal or financial interests that might affect how they make decisions.
When there's a conflict of interest, the agreement usually says that the decision has to be approved by the directors who aren't conflicted, or sometimes by the shareholders. This makes sure decisions are fair and in the company's best interests.
Directors with a conflict might not be allowed to take part in discussions or vote on decisions related to that conflict. This stops them from having too much influence.
The agreement might also stop directors from doing other business that could get in the way of their job at the company. This keeps them from competing with the company or using ideas that belong to the company.
Some agreements also check up on what directors are doing to make sure they're following the rules about conflicts of interest.
And if a director breaks these rules, the agreement usually spells out what happens next. It could mean getting in trouble or even losing their job if it's serious.
You can safeguard your business from a director competing with you after they leave by adding special rules and terms in the director's service agreement about what they can and can't do once they're no longer working for you.
You can include the following:
It's important to make sure that these clauses strike a balance between protecting your business interests and allowing the individual to pursue their career.
Clauses that are too restrictive might not hold up in court if they're seen as unfairly limiting someone's ability to work elsewhere.
We recommend seeking guidance from a legal expert specialising in employment and corporate law to ensure these clauses are legally sound and personalised to your business's requirements and potential risks.
An Enterprise Management Incentive (EMI) option deed is a document that outlines the terms and conditions of stock options granted to employees, typically directors, as part of a company's incentive scheme. These options give employees the right to purchase company shares at a predetermined price in the future.
An EMI option deed can be included as part of the directors' service agreement to consolidate the terms of employment and incentives into a single document.
Including the EMI option deed in the directors' service agreement simplifies the overall contractual framework, ensuring that the director's compensation and performance incentives are closely aligned with their roles and expectations.
However, it's important to ensure that the incorporation complies with tax regulations and legal requirements to take advantage of potential tax benefits.
To end a directors' service agreement, you should follow the terms laid out in the agreement.
Start by reviewing the agreement to understand how termination is handled. Look for details on termination by mutual agreement, for cause (like breach of contract), or without cause.
The agreement should specify the notice period required for termination, which can vary based on the role's seniority and agreement terms. If termination is for cause, document the reasons clearly, possibly with legal and HR assistance to ensure compliance with the law.
Determine any final compensation owed to the director, including salary, bonuses, and benefits up to the termination date. Also, clarify any severance package conditions.
Ensure the director returns all company property and confidential information. Once all terms are met, finalise the termination, often formalised with a termination letter outlining post-termination obligations.
Check for compliance with relevant laws, like those on unfair dismissal or discrimination. Keep detailed records of the termination process for legal protection.
Consider how to communicate the departure internally and possibly externally, depending on the director's role and circumstances.
A well-structured DSA provides clarity and certainty, clearly defining roles, responsibilities, and expectations for both the directors and the company. This clarity helps to prevent misunderstandings and conflicts, ensuring that both parties are aware of their obligations.
Legally, DSAs serve to protect both parties. For directors, it secures rights to fair treatment and appropriate compensation, while for companies, it establishes a legal framework to address any potential misconduct or underperformance by a director. This agreement is essential for resolving disputes effectively, either amicably or through legal channels.
Furthermore, they contribute to better corporate governance by ensuring compliance with relevant laws, such as the Companies Act 2006. This compliance is crucial for avoiding legal issues and enhancing the company’s reputation among stakeholders. The agreements also motivate directors by clearly outlining their compensation, benefits, and the conditions of their service, which helps in attracting and retaining top leadership talent.
Additionally, DSAs often contain confidentiality and non-compete clauses that protect sensitive company information and competitive advantages. They also facilitate smoother transitions during changes in leadership by setting out predefined terms for exits and handovers, thereby maintaining stability within the company.
When drafting DSAs several common mistakes can occur that may lead to complications or legal issues down the line.
They include:
To avoid these errors, engage with legal professionals who specialise in corporate and employment law to review and draft the Director's Service Agreements.
Our network of expert employment solicitors can help you by drafting tailored DSAs that meet the specific needs of your business and comply with current laws and regulations.
Get in touch today for a free case assessment.
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