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?
Key provisions: this subscription agreement template 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 also 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.
Get it in writing: 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.
Optional warranties: warranties can be included from the company (and founder, if selected). 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. A warranty is a contractual promise or assurance that is true at the date of the contract. If it can be proved that a warranty is untrue, the party receiving the warranty could claim that there has been a breach of contract. As a result, the party receiving the warranty may be entitled to recover all losses incurred due to the breach of contract.
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?
Simple to use: With Docue, you can create a top-quality subscription agreement easily and quickly. All you need to do is answer a series of questions, and your subscription agreement will be updated in live time to reflect your answers.
Drafted by lawyers: The subscription agreement template includes model clauses designed by business lawyers to help you draft the contract yourself and tailor it to your needs. Guidance notes written by our lawyers are included to help you along the way.
All-in-one solution: Signatures can be collected electronically, and all documents can be stored securely in Docue Drive.
Tags: subscription agreement template, subscription agreement, share subscriptions, issue of shares, EIS relief, SEIS relief
