When your startup takes over, you`ll need a number of documents before the money falls into your corporate bank account. An equity subscriber is a document you may need. While not all increases require this agreement, it is important that the founders know when it is necessary (and not) necessary to have one. A subscription agreement is an agreement between a company and an investor that sets the price and terms of acquisition of the company`s shares. Investors can protect themselves from companies by changing the terms of the agreement. As a company that sells shares or shares, this prevents an investor from changing his mind before the investor enters the deal. A subscription contract will help consolidate a promise into a firm transaction. As mentioned above, a stock subscription is just one type of stock offer document. If your investor has not applied for an equity subscription contract, it would not be in the company`s interest to offer it. Another alternative is a share offer/subscription letter in shares. This is a shorter document that still contains the main conditions and mechanics of the investment, but does not contain business or business creation guarantees. Instead, the investor must perform his own due diligence.
A stock offer/subscription letter is often used in or Series A rounds when carried by family and friends or angel investors. This is less important in future cycles or among venture capitalists. If you leave a VC, you will probably insist on a share subscription contract containing detailed presentations and guarantees from the company and the founders. However, they may seek advice or consultation with a start-up lawyer to mitigate the potential negative effects of these provisions. A subscription contract is an investor`s request to join a single limited partnership. It is also a bilateral guarantee between a company and a subscriber. The company agrees to sell a certain number of shares at a certain price and, in return, the participant promises to buy the shares at the predetermined price. Subscription contracts are generally covered by SEC 506 (b) and Regulation D rules 506 (b) and 506 (c).
These provisions define how an offer is implemented and how much essential information companies must disclose to investors. As new sponsors are added to an offer, co-sponsors receive approval from existing partners before amending the subscription contract. When it comes to investing, there are certainly some good and some bad in the decision to do so with subscription contracts.