Platform Overview

What is a Subscription Agreement?

You have decided to invest in a private company. The company has presented a promising business plan and its financial projections are sound according to advisors. You know who the managers are; you may even have met them. This is a project you want to be part of!

The only thing left to do is for the transaction between you, the investor or subscriber, and the company to be formalised. The company has already sent you a term sheet, a type of practice agreement, which you have read over and perhaps even modified. Having ironed out any misunderstandings or clarified potential issues, you are ready to sign the final contract to create the shares: the subscription agreement.

Create Your First Legal Document for Free

Create an account now to customise, print and download your First Legal Document in minutes.

What is a subscription agreement?

The subscription agreement is a promise by the company to sell a certain number of shares at a certain price and a promise by the subscriber to buy the shares at that price.

Why do you need a subscription agreement?

The agreement may be relied on at a later stage to protect each party’s rights. For you, the subscriber, you are protected from the company changing the terms of the agreement. For the company, it is a guarantee that the subscriber will pay the fixed price.

What does the subscription agreement contain?

  • Company and investment details: Name and ACN (if company)
  • Investment amount for percentage equity or capital of the fully diluted capital of the company
  • Agreement to subscribe
    • Subscription price and number of issued shares
    • Rights attached to subscription securities (redemption or liquidation preferences, voting preferences)
  • Terms for termination before completion
  • Nomination onto board

If you are looking for a subscription agreement, it can be drafted using a quick quote.

Unsure where to start? Contact a LawPath consultant on 1800LAWPATH to learn more about customising legal documents, obtaining a fixed-fee quote from our largest online network of expert lawyers or any other legal needs.

You may also like
Recent Articles

Get the latest news

By clicking on 'Sign up to our newsletter' you are agreeing to the Lawpath Terms & Conditions

Share:

You may also like

Having an equitable interest in a property may give the holder the right to acquire legal title. Find out what this means and when it can occur here.
If you're interested in protecting your assets for your children, a descendant's trust is likely the best option. Our article breaks this down.
Have you ever wondered whether there is a legal requirement to provide a receipt to customers? Read along to find out when you need to.