Subscription Agreement
In the event that you would have to discuss the terms and conditions regarding a particular matter with another party, then an agreement document will definitely come in handy. The kind of agreement document you will want to have is going to depend entirely on the situation. For example, you’ll need to create a Conveyance Agreement in the event you want to discuss the matter regarding the property rights and ownership will be transferred from one party to another.
Another good example would be the need to create a Franchise Agreement in the event that one wishes to be a part of a particular business’s franchise. So let’s say that you wish to settle matters regarding one’s stock. This would mean that you will have to create a subscription agreement and this article will teach you how to make one.
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What Is a Subscription Agreement?
Before you learn about the elements of what makes a subscription agreement, you will first need to learn as to what its purpose is. What this document does is depict how a particular company is going to sell a given number of its shares over to one of its investors for a certain amount. Not only that, but it also shows what the investor will have to agree to if he or she wishes to purchase these shares. In a way, this document stands to benefit both parties as both would gain something from the other. You may also see simple agreement letter examples.
So now that you’ve learned what a subscription agreement is for, the next thing for you to do is learn what it comprises of.
The Elements of a Subscription Agreement
Much like a Reseller Agreement or a Commission Agreement, this type of document will require the necessary elements to ensure that it is able to convey all the information that one needs to point out the terms and conditions of how the shares of a particular company will be sold to one of its investors. You’re going to need these elements so that there is a complete understanding between the parties involved regarding how the selling and purchasing of these shares will take place.
So here are the elements that you should include in your subscription agreement:
1. The Title of the Document
Let’s say that you were in charge of making a Lease Agreement between the property owner and the leasor. Now, wouldn’t you want anyone who wishes to go through the document to know exactly what it’s intended for right from the very beginning? Well, the easiest way to do that is for it to have a proper title and that’s something your subscription agreement should definitely have. The only thing that you have to do is to make sure that your title is as direct as possible, meaning that you should place the words “subscription agreement” and anything else that’s appropriate and related to the matter into the title.
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2. The Issued Shares
In a Transfer Agreement, you’ll notice that there’s a section which depicts exactly what’s going to be transferred from one party to another. A subscription agreement has a similar section that points out just what kind of shares will be sold over to the investor. While you’re writing them down, you have to be very specific as to what shares you are willing to sell to the investor as you don’t want to sell all of them. Make sure that you know and understand what shares are willing to be sold before you place any into the document to ensure that the investor is only able to purchase what is written.
3. The Price Per Share
If one were to make a Direct Deposit Agreement or a Payment Agreement, there should be an element which discusses the amount that one party involved into the agreement will have to pay. This section is very important and it’s definitely needed in the subscription agreement. The reason as to why it’s important? It’s because it will give the investor a breakdown of the amount of each share that he or she is going to purchase. This way, the investor will not have to worry about any misunderstandings regarding the total price of all the shares
So as you’re making this agreement, you will first need to determine just how much the price of each share will be before you sell it to the investor. Once you’ve determined on the price for each share, place it down to the last decimal into the subscription agreement.
4. The Payment
The investor won’t be able to buy the share if there aren’t any details regarding how it’s going to be paid. This element is where it will provide all the details regarding the payment agreement for the shares, and that’s everything from the amount that has to be paid and how it’s going to be paid. So if you’re going to write down the amount that has to be paid, be sure that you give an exact figure as to the total of all the shares that the investor will have to pay to ensure that there is no confusion when it comes to the total price.
Also, it has to point out how the investor is to pay for the shares. Usually, it would end up being through an electronic payment, but the company who’s selling these shares may provide other options as to how the investor may pay for them. Just make sure that it’s clearly pointed out as to what methods the investor is allowed to pay for these shares into the document. You may also see stock sale agreement examples.
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5. Evaluation of Risk
Just like a Assignment Agreement or a Credit Agreement, there always has to be that section which discusses the risks that one is willing to take up on accepting the terms and conditions of the agreement. This means everything regarding what will happen should the investor happen to do anything with the shares that could possibly break the agreement. Much like the discussion regarding the payment, you will have to go into full detail as to the different risks that are involved in the selling of the shares. So clearly point out what they investor can do that could possibly break the agreement and forfeit the right to the ownership of the shares.
6. The Signatures
Once that’s all done, the last thing that the legal document will need is the signatures of the parties that are involved. The reason as to why the signatures are needed is because they act as proof that both parties have come to a full understanding as well as agreement about what they have to do to ensure that the selling and purchasing of the shares take place. Also, it will be generally helpful in the event that there is a dispute regarding the matter of the shares as the signatures guarantee that the document is able to be used in court.
Be sure that those involved also provide their complete names and the date as to when the document was signed to show that the subscription agreement is legally enforceable.
Lastly, be sure that you proofread the document for any spelling or grammar errors. Even one mistake can render the contract as null and void so you have to check it at least twice or even more. Once you spot any errors, you should fix them immediately so that there will be no problems when it comes to the signing.
If you would like to learn how to create other types of agreements (Non-Disclosure Agreement, conveyance agreement, trade agreement, etc.), then all you have to do is go through our site. It has whatever article you need to help you with different situations. Just be sure that you are able to go through all of the ones you’ve gathered thoroughly so that you are able to make effective use them.
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