Share Subscription Agreement
A Share Subscription Agreement is a legally binding contract where an investor agrees to purchase newly issued shares from a company. It outlines the terms of the share issuance, subscription price, and conditions.
- 01Agreement Details
- 02Company Information
- 03Subscriber Information
- 04Subscription Shares
- 05Commercial Terms
- 06Closing
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About this document
What it is for, what UAE law expects and when to ask a lawyer instead.
What is a Share Subscription Agreement?
A Share Subscription Agreement is a contract between a company and an investor. The investor agrees to buy a specific number of newly issued shares at a set price.
Unlike a Share Purchase Agreement (which facilitates buying existing shares from another shareholder), this agreement results in capital flowing directly into the company's bank account for growth.
When is it Used?
It is the standard document for bringing in new investors or co-founders who are injecting cash. In the UAE, this document is often required by free zone authorities and the Department of Economic Development to process the share issuance.
It confirms that the new shares are validly created and allotted to the subscriber.
What Crucial Information Does It Cover?
Our template ensures the investment is secure and clear:
1. Subscription Details
The number and class of shares being subscribed to, and the total subscription price.
2. Completion Mechanics
The exact process and timeline for transferring funds and issuing the share certificate.
3. Company Warranties
Assurances from the company that it is legally existing and authorized to issue the shares.
4. Restrictions
Any lock-up periods or restrictions on the subscriber from selling the shares immediately.
Risks of Non-Compliance
Under-Capitalization
If payment terms aren't strict, investors might delay funding while retaining a claim to equity.
Regulatory Rejection
Authorities may reject the share issuance if the agreement contradicts the company's MOA.
Future Disputes
Lack of written warranties leaves the investor unprotected if the company has hidden debts.
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