What is a subscription?

Investment opportunities come in many shapes and sizes, but the subscription agreement is perhaps the most customizable of all. This agreement sells shares to individual investors. This important legal document serves two purposes for the company selling shares because they protect and require valuable investors. In addition, this document serves as a financial limit for the investor. The subscription agreements differ depending on the situation, but each generally contains the names of the parties, the number of shares and their price, as well as the expectations of the parties involved.

A subscription agreement is a popular form of application for financing for smaller businesses and start -ups. If entrepreneurs do not have resources to publish or work with risk capitalists, they often look for individual investors. This is a binding contract that exchanges a one -time money trade for a specific number of shares in the company.

This agreement is beneficial because it acts as limitedpartnership. It is not expected that this person is also known as a quiet partner, providing financing outside the one -off investment. This significantly reduces the risk for the investor. One of the important aspects to keep in mind in this type of partnership is that the investor usually does not have the word in the decision -making of the company, as a full partner would have.

The subscription is equally advantageous for entrepreneurs because it serves the same purpose of the Handshake agreement, but with the legal force of the determination of the investor's guarantees. Guarantees are given expectations regarding the return of the investment, such as a specific percentage of income or a predetermined lump sum on a particular date. Many subscription agreements also require a large amount of information from the investor, which helps entrepreneurs. Require an investor's financial status and investor's history helps to determine whether it is likely that the individual will be able to provide payment.

AgreementAnd the subscription does not consider a simple template, such as many other documents for legal investment, and is usually registered specifically for the situation of each investor. This does not mean that all agreements are drastically different and in fact tend to share four common features. The names of the investor and entrepreneurs are always listed in the document. Another important aspect of these documents is to indicate how many shares will be provided at what price. The most important aspect, legally, for any subscription is the listing of guarantees and expectations of both parties.

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