Writing a Subscription Agreement
This playbook outlines the step-by-step process to draft a subscription agreement. A subscription agreement outlines the terms of an equity purchase in a private company.
Step 1: Preparation
Gather all necessary information about the investment and the involved parties. This includes company details, investor details, the amount of investment, and the number of shares being purchased.
Step 2: Drafting
Create a first draft of the subscription agreement. Ensure to include key clauses such as investment amount, share price, company valuation, investor's rights and obligations, governing law, and any representations and warranties.
Step 3: Review
Carefully review the draft to ensure that all terms are clear and legally sound. Check for any errors or omissions in the agreement.
Step 4: Feedback
Share the draft with relevant parties, such as legal advisors and the investor, for feedback. Incorporate any suggestions or corrections they might have.
Step 5: Finalize
Finalize the subscription agreement by making the necessary revisions. Ensure that both the company and the investor approve the final terms.
Step 6: Execution
Arrange for all parties to sign the agreement. Ensure that all signatures are collected and the agreement is dated.
Step 7: Record Keeping
Keep a copy of the executed agreement securely filed. Distribute copies to all parties involved for their records.
General Notes
Legal Compliance
Always ensure that the subscription agreement complies with the relevant securities laws and regulations.
Professional Advice
Consider obtaining professional legal and financial advice to tailor the subscription agreement to the specific circumstances.