Director's Service Agreement
A director’s service agreement is very similar to an employment contract, in that it sets out the director’s responsibilities and duties, as well as detailing terms such as pay, termination of the appointment and restrictive covenants. For more information on employment contracts, please see here.
Due to the senior position of a director, the agreement will contain provisions regarding outside interests, such as holding shares in other companies. It will set out what outside interests are permitted and how such interests should be declared. It’s common for the board to be able to approve an interest that otherwise wouldn’t usually be allowed.
Directors have access to a wide range of confidential information, which of course they need to be able to conduct their duties properly. As a result, director’s service agreements should contain stringent confidentiality provisions to ensure such information is adequately protected. Similarly, an intellectual property assignment provision is commonplace to ensure that any intellectual property created by the director is owned by the company and not the individual.
It’s important to note that the template director’s service agreement must be signed as a deed and therefore must be signed in the presence of an independent witness, who will also sign the document and provide their personal details. Witnesses must be 18+ years of age, not related to the signatory, and not involved in the matter at hand.
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