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Share subscription agreement

About of Service

Services related to a Share Subscription Agreement (SSA) typically involve legal and financial aspects to facilitate the issuance of new shares in a company. Here are the key services often associated with an SSA:

  1. Legal Drafting and Review:

    • Drafting the Share Subscription Agreement to outline the terms under which new shares will be issued to investors.
    • Reviewing the SSA to ensure it complies with company bylaws, regulatory requirements, and accurately reflects the agreed terms.

  2. Due Diligence:

    • Conducting due diligence on behalf of the company issuing shares to verify the eligibility of investors and ensure compliance with securities laws.
    • Providing due diligence reports to potential investors to disclose pertinent information about the company.

  3. Structuring the Investment:

    • Advising on the optimal structure of the investment, such as the type of shares to be issued (common shares, preferred shares, etc.) and the pricing mechanism.
    • Helping to negotiate and finalize the terms of the investment with potential investors.

  4. Regulatory Compliance:

    • Ensuring compliance with securities laws and regulations governing the issuance of new shares.
    • Assisting with filings and obtaining necessary approvals from regulatory authorities, if required.

  5. Tax Advisory:

    • Providing tax advice related to the issuance of new shares, including potential tax implications for both the company and investors.
    • Structuring the transaction to optimize tax efficiency and minimize tax liabilities.

  6. Investor Relations:

    • Facilitating communication and negotiations with potential investors.
    • Managing relationships with existing shareholders and ensuring transparency throughout the investment process.

  7. Closing and Post-Closing Activities:

    • Facilitating the closing of the subscription, including preparing closing documents and ensuring funds are properly transferred.
    • Handling post-closing matters such as issuing share certificates and updating corporate records.

  8. Dispute Resolution:

    • Providing legal support in resolving any disputes that may arise during the negotiation or execution of the SSA.
    • Representing the company in mediation, arbitration, or litigation if necessary.

  9. Documentation and Record Keeping:

    • Drafting and maintaining accurate records of the SSA and related documents.
    • Ensuring compliance with record-keeping requirements and corporate governance standards.

  10. Compliance Monitoring:

    • Monitoring ongoing compliance with the terms of the SSA, including any rights and obligations agreed upon with investors.
    • Advising on corporate actions that may affect shareholders and ensuring all parties adhere to agreed-upon terms.

Uses and Benefits
  • Legal Drafting and Review: Draft and review the SSA to define terms for new share issuanc
  • Due Diligence: Conduct due diligence to verify investor eligibility and comply with regulations.
  • Structuring the Investment: Advise on investment structure (share type, pricing) and negotiate terms.
  • Regulatory Compliance: Ensure compliance with securities laws and assist with regulatory filings.
  • Tax Advisory: Provide guidance on tax implications for the company and investors
  • Investor Relations: Facilitate communication and manage relationships with investors.

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Charges Structure & Our Scope of Work

Additional Disclosure

  1. Subscription Details: Clear identification of the subscriber(s) who are subscribing to the shares, including their legal names, addresses, and details of their subscription (number of shares, class of shares, etc.).

  2. Subscription Price: Disclosure of the subscription price per share or the total consideration for the shares being subscribed, including any adjustments or mechanisms for determining the final price.

  3. Payment Terms: Explanation of the payment terms and conditions, including whether the consideration is paid in cash, through promissory notes, or by other means, and the timing of payments.

  4. Representations and Warranties: A list of representations and warranties made by the subscriber(s) regarding their ability to subscribe for the shares, such as legal capacity, authority to enter into the agreement, and compliance with laws.

  5. Covenants: Agreements and promises made by the subscriber(s) regarding their conduct before and after the subscription, such as agreements not to transfer the subscribed shares for a certain period or to maintain confidentiality.

  6. Conditions Precedent: Conditions that must be satisfied before the subscription can proceed to completion, such as regulatory approvals, shareholder approvals (if applicable), and third-party consents.

  7. Subscription Schedule: Timelines and deadlines for completing the subscription, including the date(s) by which payment must be made and the shares issued.

  8. Use of Proceeds: Disclosure of how the funds raised through the subscription will be utilized by the company, ensuring transparency to subscribers and stakeholders.

Terms & Conditions

Documents & Detail Required

The documents required for a Share Subscription Agreement (SSA) typically include:

  1. Share Subscription Agreement: This is the main document that outlines the terms under which new shares will be issued by the company to the investors. It includes details such as the number of shares, price per share, payment terms, rights and obligations of the parties, representations and warranties, and conditions precedent to closing.

  2. Board Resolution: A resolution passed by the board of directors of the company authorizing the issuance of new shares and approving the terms of the Share Subscription Agreement.

  3. Shareholders' Resolution: In some cases, a resolution passed by the shareholders of the company may be required to approve the issuance of new shares, especially if it involves a significant issuance that dilutes existing shareholders.

  4. Subscription Form: A form completed by each investor, specifying the number of shares they wish to subscribe to, the price per share, and other relevant details.

  5. Investor Questionnaire: Sometimes required to gather information about the investor, such as their identity, accreditation status (if applicable), and financial suitability to invest.

  6. Due Diligence Documents: Depending on the requirements and size of the investment, due diligence documents may include financial statements, corporate governance documents, contracts, intellectual property registrations, and any other relevant information about the company.

  7. Disclosure Documents: Documents provided to investors to disclose material information about the company, its operations, financial health, risks, and any other information necessary for investors to make an informed decision.

  8. Legal Opinions: Legal opinions from the company's legal counsel confirming the legality and validity of the issuance of new shares, compliance with corporate laws, and any other legal matters relevant to the transaction.

  9. Closing Documents: Documents executed at the closing of the subscription, including share certificates (if physical certificates are issued), subscription payment confirmations, and any other documents required to complete the transaction.

  10. Regulatory Filings: Depending on the jurisdiction and regulatory requirements, filings with governmental authorities or securities regulators may be necessary to notify them of the issuance of new shares.

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OUR REVIEW

FAQ'S

What is a Share Subscription Agreement (SSA)?

A Share Subscription Agreement is a legal contract between a company and an investor outlining the terms under which the investor will subscribe to purchase new shares issued by the company.

What does a Share Subscription Agreement include?

It typically includes details such as the number of shares to be issued, the price per share, payment terms, representations and warranties, conditions precedent, and any other terms agreed upon between the parties.

Who drafts the Share Subscription Agreement?

The Share Subscription Agreement is usually drafted by legal professionals representing either the company or the investor, ensuring that all legal aspects of the transaction are properly addressed.

What is the purpose of due diligence in relation to a Share Subscription Agreement?

Due diligence is conducted to verify the company’s eligibility to issue new shares, assess its financial and legal health, and provide transparency to investors about potential risks associated with the investment.

Do all Share Subscription Agreements require regulatory approval?

The need for regulatory approval depends on the jurisdiction and the specific circumstances of the issuance. In many cases, compliance with securities laws and regulations is necessary, which may involve filings with regulatory authorities.

What are the tax implications of a Share Subscription Agreement?

Tax implications can vary based on factors such as the jurisdiction, the type of shares issued, and the investor's tax status. It’s advisable for both parties to seek tax advice to understand potential tax liabilities and optimize tax efficiency.

How long does it take to complete a Share Subscription Agreement?

The timeline can vary depending on factors such as the complexity of the transaction, due diligence findings, regulatory approvals required, and negotiation of terms. It can typically range from a few weeks to a few months.