Sample Private Equity Subscription Agreement
There is, however, an exception for crowdinvesting. These are considered different and have different requirements. Private companies that wish to raise funds to sell their shares to certain individuals or entities can use these agreements without having to register with the U.S. Securities and Exchange Commission. A common event is venture capital financing, in which a company sells its shares to venture capital investors and, in return, exchange capital that helps the business start or grow. Before the sale of shares is concluded, both parties must sign a legal purchase agreement. This is called a stock agreement or a company underwriting agreement. A subscription contract is an investor`s application to join a limited partnership. It is also a two-way guarantee between a company and a subscriber. The company agrees to sell a certain number of shares at a certain price and, in exchange, the subscriber promises to buy the shares at the predetermined price. What information is typically contained in a subscription agreement? Subscription agreements are generally covered by SEC Rules 506(b) and 506(c) of Regulation D.
These provisions define how an offer is made and how much essential information companies must disclose to investors. When new sponsors are added to an offer, the add-ons obtain the agreement of the existing partners before modifying the subscription contract. Many agreements have terms and clauses that protect any private company. Subscribers must comply with it for the agreement to remain enforceable. A indemnification clause means that subscribers must reimburse or compensate the company in the event of financial damage due to a false presentation by the subscriber. Many participation contracts also have a confidentiality clause and a non-competition clause. They may also include clauses that make it mandatory for subscribers not to recruit the company`s current customers or to somehow affect reputation or name.. . .