The Proper Business provisions are a standard set of commitments you embed in your company's articles from day one. They don't require our investment. Anyone can adopt them.
The provisions are designed to be straightforward to adopt, legally robust, and founder-controlled. You set the specific numbers — the wealth cap, the return cap, the pay ratio. Once embedded in your articles, they apply to all shareholders equally and cannot be removed without almost unanimous consent.
They are open. You do not need to be funded by us to adopt them. If you believe in the philosophy and want to build your company this way, take the language below and work with your solicitor to embed it in your articles.
These provisions prevail over any inconsistent provision of the Articles, any Shareholder Agreement, and any instrument issued by the Company.
The Company shall pay no less than the Real Living Wage to all employees.
The Company shall operate subject to a Maximum Pay Ratio of [A]x between its highest-paid and lowest-paid roles. Where there are no other employees, the annualised real living wage will serve as the 'lowest-paid role' remuneration for highest-paid calculations.
The numerical value of the pay ratio A, and the methodology for its calculation, shall be set out in a Shareholder Agreement or board-approved policy consistent with this Schedule.
The Company shall not structure roles, remuneration, or contracting arrangements with the primary purpose of circumventing this Article.
No Share, security, or economic interest issued by the Company shall carry an entitlement to receive value in excess of a fixed Investor Return Cap of [B]x the original price paid for such interest.
No individual who is, or has been, a Founder or an Employee shall be entitled to realise value in excess of a fixed Founder and Employee Wealth Cap of £[C]m, excluding ordinary salary, wages, benefits, and cash bonuses paid in the normal course of employment.
Any value generated by the Company that would otherwise be payable in excess of the Investor Return Cap or the Founder and Employee Wealth Cap shall be deemed Surplus.
All Surplus shall be paid directly and irrevocably to the Surplus Nominee [D], it being a charity, trust, foundation, or other public-benefit vehicle not controlled by any Founder, Employee, or Investor.
The Investor Return Cap B, the Founder and Employee Wealth Cap C, and the Surplus Nominee D shall be fixed in these Articles and shall apply to all Shares and economic interests, present and future, without distinction of class.
Priority Return. On any Exit, Distribution, or other realisation of value, all proceeds shall first be applied to Investors pro rata until they have received 100% of the External Capital invested. Thereafter, proceeds shall be distributed pro rata among all Shareholders.
Exit Settlement. In the event of a Share Sale, Asset Sale, or Listing (an "Exit"):
The total proceeds shall be distributed according to the Caps set out in 2.1 and 2.2.
Any proceeds in excess of these Caps shall be paid to the Surplus Nominee [D] as set out in 2.3 and 2.4 as a final "Exit Settlement".
Upon receipt of the Exit Settlement, the Surplus Nominee's rights under this Schedule shall be deemed satisfied and extinguished, and this Schedule [X] may be repealed by a Special Resolution of the acquiring entity to facilitate the completion of the Exit.
This Schedule may be amended, varied, or repealed only by a resolution approved by not less than 95% of the total issued Shares of the Company. No amendment may take effect unless approved in accordance with this Article.