A subscription agreement for new shares is a legal document that outlines the terms and conditions of a private offering of new shares. This agreement is typically used by companies to raise capital and to offer their shares to a select group of investors.
The subscription agreement outlines the terms and conditions of the offering, including the number of shares being offered, the price per share, and any restrictions on the transfer of shares. It also sets out the rights and obligations of both the issuer and the subscriber.
One important aspect of a subscription agreement is the representations and warranties made by the subscriber. These may include confirming that the subscriber is an accredited investor, that they have the financial resources to make the investment, and that they have conducted their own due diligence on the company.
Another key aspect of a subscription agreement is the subscription process itself. This may include a requirement for the subscriber to complete a subscription form, provide proof of payment, and sign a copy of the agreement.
A subscription agreement also typically includes provisions for how the shares will be allocated, including any pro-rata rights, as well as what happens in the event of default by either the subscriber or the issuer.
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