Subscription Agreement Versus Stock Purchase Agreement

A shareholders` pact is concluded to protect investors` investment by defining a shareholder`s rules and rules. A shareholders` agreement is concluded between all shareholders and the company or between a group of shareholders and the company. A share subscription contract would be necessary if the company wants to raise funds and in particular by issuing shares, by not diluting the share of the owners. He uses that money for his own purposes. Normally, the founders of the company use their own money at the beginning of the business, but ultimately, the founders must look for money from angel investors or friends or strangers who must be spent in exchange for shares for the investment. When one of the founders sells his shares, a share purchase agreement is executed to record the transfer between the founders of the sale and the incoming investor. In such cases, the consideration is paid to the founders and that part of the money is not invested in the company. But if the company is not willing to dilute the already held stake of investors and founders, then a SSA is preferred. Preference is also given in the early stages when the founders do not want to sell their shares so early. Upon completion of this agreement, the person who subscribes to the shares becomes the shareholder of the company. This can be done to raise capital either through the public offering or through private placement. Amendments and waivers: It is agreed that, during the duration of the agreement, none of the conditions have been removed as a legal instrument of the parties For a legally binding agreement, the first criterion to be met is offer and acceptance. For example, a company A wants to invest something and, to that end, invites investors to invest in the company.

B an investor who wants to invest in Company A brings 100 kronor and, in return, Company A B offers a certain number of shares corresponding to the amount of the investment. B thus becomes the owner of Company A to a certain extent. As we can see, there was an offer of A that was duly accepted by B, which is an agreement between these two. Instead of obtaining a prospectus, an investor involved in a private placement would receive a private placement memorandum. This document contains some of the same information, although the description of the installation is generally less complete than what would be made available to a member of the public.