2. 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.
3. WHY YOU NEED A SHARE
SUBSCRIPTION 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);
4. ◦ 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
5. 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;
6. ◦ 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.
