What is this subscription letter template?
The basics: When a person wishes to obtain shares in a company in return for cash, this is known as a 'subscription'.
Content of this subscription letter template: This subscription letter template is a letter agreement, entered into by a single individual or corporate subscriber under which they agree to pay (or 'subscribe') for shares in a company in return for a cash payment.
Key terms: The subscription letter template sets out the price that the subscriber has agreed to pay for each shares to be issued to them and the total amount that they agree to pay. It also authorises a company to enter the subscriber's details into the register of members (i.e. shareholders) upon receipt of payment for the shares.
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. Documented the transaction avoids any potential disputes or misunderstandings in the future.
When do I need to use this subscription letter template?
Issue of shares: You would use this document when issuing shares to an individual or company. You shouldn't use this document in relation to a transfer of existing shares from one shareholder to another.
No warranties: The document assumes that no warranties (promises) are required to be given by the company or any of its shareholders (typically the founders or majority shareholders). If you want to include warranties, you should use our subscription agreement template. The subscription agreement is a more detailed version of this 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.
What else do I need to do when issuing shares?
Issue a share certificate: Under UK company law, a company has a duty to provide a shareholder with a certificate for any shares issued or transferred to them. Docue's share certificate template can be used for this purpose.
Update statutory books: It is a requirement of UK company law to keep a set of books (or registers) which contains key information about your company. This includes details of the company's members/shareholders. Docue's statutory registers template can be found here.
Why use Docue's subscription letter template?
Easy to use: With Docue, you can create a top-quality subscription letter easily and quickly. All you need to do is answer a series of simple questions, and you will have a subscription letter that is ready for use in no time at all.
Designed by lawyers: The subscription letter template includes model clauses designed by business lawyers to help you draft the contract yourself and tailor it to your needs. The document is fully customisable and will be updated in live time to reflect the answers given.
Contract management solution: Signatures can be collected electronically using Docue's e-signature function, and all contracts you make are saved in your company's own secure storage account.
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