07 Oct Share Subscription Agreement Sample India
The share subscription contract is a kind of share offering document. It is also called a two-way guarantee, the subscriber agrees to buy shares at a fixed price, while the company agrees to sell these shares. It is an exchange of promises between a shareholder (subscribers) and the company. Most of the time, it is preferred by startups after the terms have been defined and negotiated on a non-binding document, Term Sheet. Considerations: It contains the basic information on how the company is involved in what type of operation, the subscribed and paid-up capital of the company, how the counterpart of the subscription of shares is paid, percentage of the acquisition by the investor, the nominal value of the shares, via the term sheet. In this case, you need a share purchase and subscription contract. Liquidation preferential shares: the liquidation preference determines the first paid and the amount they receive in the event of liquidation, bankruptcy or sale. This is the preference given to investors to get their money back first, and then to other stakeholders and creditors in the event of the liquidation of the company. This clause should be very carefully specified on the persons who are privileged during the liquidation of the company. Specific service: this is the single clause, since the parties to this agreement can benefit from a specific service, with or without damages, as a remedy. This article was written by Shambhavi Singh of Bharti Vidyapeeth. She earned a degree in M&A, Institutional Finance and Investment Laws (PE and VC Transactions) from LawSikho.com. Here, she discusses “How to Create a Share Subscription Contract.” Any dispute or question concerning its existence, validity or cessation may be settled amicably first.
If the case is not resolved, it may be referred to arbitration proceedings and the seat of arbitration may be determined by the parties to the agreement. The arbitral award is binding on both parties. Communications: any communication or communication relating to the contract must be made in writing and transmitted personally to their address. It is intended for smaller and simpler transactions: the introduction of a family member into a company, an officer or director, the appointment of a new non-executive member of the board of directors, who will benefit from a small stake, or an existing shareholder to invest additional equity. There may be n number of the arbitrator and their appointment may be made by founders, directors, courts. The costs of the arbitration may be borne by any party, as set out in the Agreement. The subscriber may require it to fulfil its financial commitment and to fulfil its obligations under the agreement. The document describes the parties to the transaction, the description of the shares put up for sale, the purchase price (consideration), the guarantees and assurances of the parties, the requirements before and after completion, etc.