What is this subscription agreement template?
When a person wishes to obtain shares in a company in return for cash, this is known as a 'subscription'.
This subscription agreement template is an agreement between a company, its founders (if applicable) and one or more individual(s) or corporate 'subscribers' under which they agree to pay (or 'subscribe') for shares in a company in return for a cash payment.
What does this subscription agreement template include?
It sets out the price that the subscriber has agreed to pay for each share to be issued to them and the total amount that they agree to pay. It contains optional provisions where subscribers are seeking tax relief for their investments under the UK Government's SEIS or EIS tax relief schemes and a series of warranties (or promises) that are given by the company and, if applicable, its founders to the subscribers.
Although such an agreement is not strictly required for someone to be issued with shares in a company, it avoids any confusion over how much is being paid and how many shares are being issued in return. The warranties are designed to protect the investment made by the subscribers by ensuring they have an understanding of matters relating to the company at the time of their investment.
When should I use this subscription agreement template?
You would use this subscription agreement template when issuing shares to an individual or company. You wouldn't use this document in relation to a transfer of existing shares from one shareholder to another.
This subscription agreement template is a more detailed version of the subscription letter template that is intended for use with multiple investors who are seeking limited warranties from the company and/or the founders, assurances regarding compliance with S/EIS rules if they are seeking tax reliefs under those schemes and limited rights to receive information about the company. This form of agreement would not be suited to more complex venture capital-backed investment rounds where the warranties and protections would be considerably more extensive.
Why Docue?
With Docue, you can create a top-quality subscription agreement easily and quickly. The subscription agreement template includes model clauses designed by business lawyers to help you draft the contract yourself and tailor it to your needs.
Signatures can be collected electronically, and all contracts you make are saved in your company's own contract account.
Tags: subscription agreement template, subscription agreement, share subscriptions, issue of shares
