DEFINITION: Share Subscription Agreement is an agreement between a member and the co-operation, that outlines the terms and conditions that apply to the member as a shareholder in the co- operation.
WHY YOU NEED A SHARESUBSCRIPTION AGREEMENT?You need a Subscription Agreement if you wish to subscribe for shares in a company to ensure that: ◦ your rights as an incoming shareholder are protected; ◦ you have an opportunity to undertake complete due diligence before you complete your subscription (in the template this is a condition precedent);
◦ as the subscriber you subscribe for shares in the company free from security interests;◦ the subscription shares are issued to you on the completion date;◦ you obtain appropriate warranties and indemnities from the company, and if appropriate, other existing
RISKS OF NOT HAVING A SHARE SUBSCRIPTION AGREEMENT:If you subscribe for shares in a company without an agreement some of the risks may include: ◦ you, as subscriber, may buy shares that are not free from security interests or are not properly issued by the company;
◦ you may be buying shares in a company without knowing the financial position of the company;◦ there may be limited recourse against the company or existing shareholders if the value of the company is misrepresented.