Shares in Exchange for Software? Vague Agreement vs Reasonable Contract Fee

What should be done if there is an agreement that the software developer will develop software for a client free of charge for the time being, but in return will receive shares in the client’s private limited company? This question was before the Amsterdam District Court in a case involving software developer “Cimico B.V.” (hereinafter Cimico), which had worked full-time for its client “Giant Leap Technologies B.V.” (hereinafter Leap) from March 2020 to July 2023. This was on the basis of a contract for services.

You can see where this is going; with such a vague agreement, it becomes a matter of guesswork as to whether, when, and at what value Cimico would receive shares in Leap. Naturally, negotiations took place between Cimico and Leap, but the parties were unable to reach an agreement. Cimico then terminated the agreement with Leap and sent it an invoice for €700,000 excluding VAT, and shortly afterwards also seized assets to the value of that €700,000. In contrast, Leap considered the termination to be unjustified and claimed damages in the amount of €296,074, arguing that the termination was unlawful.

What were the key questions at issue?

1. Was Cimico entitled to payment in cash, even though the parties had previously discussed payment in shares?
2. How much must Leap pay if no specific fee for the assignment had been agreed?
3. Was Cimico entitled to terminate the assignment after having worked for Leap for three years without payment?

The value of those shares in their agreement remained undetermined. However, the agreement did state that, for illustrative purposes, one month of software development had a value of €5,000 including VAT.

1. Was Cimico entitled to payment in cash based on the invoice for €700,000? The court found that the mere stated intention to pay in shares was insufficient to constitute a binding agreement between Leap and Cimico. This was for the simple reason that the parties had never set this out in writing: for example, how many Leap shares, when, and at what valuation. Leap itself did not take any initiative to reach a share arrangement either. Conversely, however, Cimico had not waived its right to monetary compensation either. What was the court’s conclusion, then? The court ruled that Cimico was indeed entitled to payment in cash; so it could forget about shares. The court established that no specific amount had been agreed, but did recognise that Cimico had developed software for Leap for three years, thereby enriching the company.
2. Cimico claimed to be entitled to the market-rate IT hourly rate of €100 per hour that it had demanded. The court did not agree with this and rejected the claim. After all, Cimico knew in advance that Leap could not afford that hourly rate or the scale of the work. The court thus effectively identified two key circumstances: namely (i) that Cimico had consciously accepted a lower rate, or at least a lower (sales) value, at the outset and (ii) that this was in exchange for the opportunity to acquire a shareholding in Leap.
3. The court nevertheless ruled that Cimico was at least entitled to a reasonable wage (as per the contract). The court agreed with the only firm agreement between the parties, which was that €5,000 per month excluding VAT applied as an ‘exit fee’ for the year 2020. Thus, ‘a deliberately lower rate of €100 per hour and merely the prospect of a shareholding’ were the deciding factors here.
4. What was the outcome, according to the court? It awarded €250,000 excluding VAT. This was calculated on the basis of over three years of software development work, namely 40 months × €5,000 (€200,000), and the court assumed that this custom software was partly intended to be transferred to Leap under copyright. That copyright transfer (IP transfer) was set at 1/4 of €200,000, amounting to €50,000, and thus totalling €250,000 excluding VAT.
5. What lessons can be learnt from this?

• Are there no written IT or share agreements? Without fixed rates or share percentages, the court will determine retrospectively what is “reasonable” — which may turn out to be lower than expected.
• Worked unpaid for too long? The longer one works without payment, the greater the financial and legal uncertainty for both parties.
• Unclear grounds for termination? If it is not clear when the assignment ends, both parties may be held liable for premature departure.

Recommendation for a “shares for software” agreement

Always set out payment arrangements in writing, even (and especially) if payment is partly in shares. Ensure at least the following:

● A specific amount or rate;

● A clear share arrangement (percentage, timing, valuation method);

● A notice period with a reasonable timeframe;

● Interim review points with written confirmation.

Source: ECLI:NL:RBAMS:2025:1620, Rechtbank Amsterdam, 754080 HA ZA 24-77

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