A Guideline How to Write a Subscription Agreement Template
A subscription agreement is a contract made between a company & a private investor for selling a specific number of shares at a specified price. The investor needs to fill a subscription agreement template that documents her or his suitability to invest in the partnership. Let’s discuss further!
This agreement is very useful to keep track how many shares sold & how much the shares are sold. This agreement outlines any information about transaction like the number of shares & price as well as confidentiality provisions. Sometimes, it also includes a specific rate of return the investor will receive.
The rate of return can be a percentage of the net income of the company. However, it may also be a specific amount in lump sum to be paid on specific days. Mostly, this agreement is used on startups or smaller companies. Anyway, you have to be able to make a subscription contract template.
For a company which needs more funding, this agreement can be a good way to meet it without taking a company public to invest. Since investor enters into a limited partnership, he or she belongs to a silent partner. Usually, he or she is only expected to make one-time investment.
Tips in Making a Subscription Agreement Template
This agreement relies on its regulation. The stipulations in the rules include some points. First, it is about how a company can or cannot solicit an investor. Besides, it relates to what information that can be shared to investor. Then, it also relates to the person or party who is allowed to make investment.
Generally, a private company needs to make a subscription agreement form when they want to raise capital from the private investor. It can be done by selling the ownership of company or the shares. Anyway, having this agreement will be very useful and helpful
There are some important details of information that you will need to include in this agreement. The first is information of the company. Make sure that you state the company’s name, address, and contact information. Secondly, you will need to describe the expectations of the involved parties clearly.
After that, you are also required to include agreement to subscribe. It includes the number of shares as well as price. Then, the rights that are attached to the subscription should be included, too. It relates to voting preferences and also liquidation as well as redemption preferences.
Next, what you have to include are the terms for termination before completion. You have to outline the terms as detailed and clear as possible. In addition, you will also need to include the nomination onto board. It also belongs to one of the most important details.
For the next details, it should be confidentiality provisions. The final detail to be included is about how the return will be paid. Make sure that you include all of those details in the subscription agreement template. Then, let both parties to sign it off.
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