Share Subscription Agreement Vs Share Purchase Agreement

Both the share contribution contract and the shareholder contract are signed at the end of the due diligence process when setting up a company. Although they are two separate documents, they are sometimes brought together in one document, called an investment agreement. However, for the sake of clarity, it is recommended to keep them separately. A share purchase agreement is used when shares are sold by a person other than the company that issues its own shares. When a company issues its own shares, a subscription contract is used. The seller and the buyer of the shares sign the contract. The company that issued the shares is signed « Corporation ». For an agreement to be legally binding, the offer and acceptance must first be satisfied. For example, company A wants an investment and to this end, it invites investors to invest in the company. B an investor who wishes to invest in company A contributes 100 crores and, in return, company A B provides some shares corresponding to the amount of the investment. This will give B, to some extent, ownership of company A. As we can see, there was an offer from A that was duly accepted by B, and it is an agreement between those two. The scope of the shareholders` agreement is broader, as it clearly defines the roles, responsibilities and powers of a shareholder in the company.

From the name itself, we can imagine an agreement in which shares are transferred from one party to another. Shares give shareholders (one who owns the shares) ownership of the company, and this can be done by purchasing one share by the company or by the company`s existing shareholders. To make a transfer legally binding, it is always advisable to enter into an agreement. Instead of obtaining a prospectus, an investor involved in a private placement would receive a private placement brief. This document contains some of the same information, although the description of the facility is generally less exhaustive than what would be provided to the public to a member. A subscription contract is often made available to accredited investors with the private placement memorandum. This agreement could determine the investor`s return, for example. B if the returns are paid in lump sums or as a percentage of the company`s net profit. Most companies and shareholders prefer to conclude an agreement on the basis of the Law on Shares, which allows the provisions mainly in all other areas.

In particular, it offers liability on the basis of rights with liability to both parties, which greatly helps the procedure.. . . .