Just like any contract that finalises the purchase of assets, a Share Subscription Agreement binds investors to buy new shares issued by the Company, and sets out the Company’s promises and responsibilities in respect of the investment.
A share subscription agreement is a formal agreement between an investor and a company in which the company authorises the issue of new shares and the investor agrees to purchase a specified amount of those shares at a particular price.
A share subscription agreement protects the company from investors backing out at the last minute, can join them to the shareholders’ agreement and clearly outlines the terms of the investment to avoid any confusion, including limiting the company’s liability in respect of the investment. In this same regard it also protects the shareholder.
If you have an investor (or investors) keen to purchase equity in your company or are looking for a way to incentivise potential investors to invest in your company, you will need a share subscription agreement.
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