Share Subscription Agreement: simple transaction


Template: Share Subscription Agreement: simple transaction

What Net Lawman says about this template:

"This short agreement sets out the terms under which a new or current shareholder subscribes for new shares to create a minority or majority holding in a private company in any industry. He or she is likely to be very familiar already with the business, trust the existing shareholders, or be buying in at a price which lowers the risks significantly. This is therefore an ideal document for situations such as: an additional equity investment by a current shareholder, employee buy-ins, or bringing in a relative into a family business. The document is suitable for companies in any industry and for subscriptions of any size.

It is intended for smaller and uncomplicated transactions:

  • for the introduction of a family member into a company
  • a senior employee or director buy-in
  • the appointment of a new non-executive board member who is incentivised by a small shareholding
  • for an existing shareholder to invest additional equity

It differs from our standard subscription agreement by having no warranties, so the subscriber is likely to be familiar with the company already, or trust the existing shareholders, or be buying in at a discount.

The subscription is for cash, with payments in two stages. The final price to be paid is dependent on the profit of the company in the next set of accounts. If the profit is not as promised, the subscriber can deduct an amount from the final payment. The penalty reduction of balance is calculated by reference to a simple, flexible formula that you can alter.

You may also make a loan to the company, though this is covered in a separate document and merely referenced here."


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