• October 2019
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Subscription Agreement

Manage your shares.

A subscription agreement allow you to sell a given number of shares to an investor at a certain price.

– Learn of fundraising opportunities

– Save money long term

– Helps investigate the other party


Why get a subscription agreement

There is no universal way to purchase shares of a startup. However, a highly customizable legal document called a subscription agreement is often utilized for this purpose. A subscription agreement, or purchase agreement, is when a business promises to sell a number of shares to an investor at a certain price in exchange for an agreement by the investor to pay that price. This is the most popular method for funding smaller businesses as they typically do not have neither the resources needed to go public nor the criteria that a venture capital (“VC”) firm would require. Investors (called subscribers) and businesses prefer this agreement because it imitates a limited partnership or a silent partner as the individual investor is not expected to provide any additional funding.

This lowers the risk for the investor in exchange for them having no influence in company decisions. For the business, it solidifies any verbal agreement made with the investor such as a percentage of net income or a lump sum payout on a particular date. With any type of funding arrangement, it’s smart to have a subscription agreement lawyer draft or review your subscription agreement to assure its long lasting effectiveness.

The benefits
Learn of fundraising opportunities

The business agreement lawyers on LawTrades are experienced with fundraising so they can assess if a subscription agreement is indeed the best route for your company.

Helps investigate the other party

Entering into a subscription agreement requires a thorough vetting of each side to the agreement. An experienced subscription agreement lawyer will help you with this process.

You’ll save money in the long run

Hiring a business agreement lawyer for issues involving fundraising is smart as any mess ups with equity can be costly. Equity needs to be coveted and a business contract lawyer will help you do just that.


FAQ


Can my company use a template found online?

Although there are some templates floating around the Internet, it is highly advised that a subscription agreement lawyer be retained for such a complex and important process.

What kind of businesses typically use a subscription agreement?

Closely-held businesses, private businesses, and startups utilize subscription agreements often.

What terms / provisions are usually in a subscription agreements?

This agreement typically contains the names and details of the parties involves, the number of shares, the price, and the roles and responsibilities of the parties involved.

Must a subscription agreement be registered with the U.S. Securities and Exchange Commission?

No, which is one of the advantages for private businesses looking for funding.

This agreement typically contains the names and details of the parties involves, the number of shares, the price, and the roles and responsibilities of the parties involved.

How do businesses and subscribers investigate each other before entering into a subscription agreement?

Subscription agreements often require a large amount of detailed information about the investor which helps establish credibility. The subscription agreement essentially serves as a screening process for the investor as it reveals their financial status and history.


Reviews 

 


Daniel, H. | ★★★★★

“Simple and trustworthy system. The project manager through text message is a good idea and helps a lot with the process, especially their timely response.”


Rafael, R. | ★★★★★

“I was very comfortable with the environment it was my first meeting and I knew it was on the right track I did understand my lawyer I was listening I did absorb the information given to me.”


Ori, A. | ★★★★★

“Great experience all around, LawTrades was just so much more personal and much better than other startup/online on-demand solutions for legal work,. Almost feels like I handpicked and hired the attorney myself. The Attorney was available to answer questions by phone or text message, so was the LawTrades rep who set the whole thing up. And when setting up new entities you always have questions, so this was a big deal for me. The Attorney assigned to my project was available on demand to help out explain things every step of the way and I think the guys at LawTrades have done a great job with making you feel extremely comfortable. After all was done I even got an email and a call from one of the co founders of the company to make sure I had a seamless experience. I never got a call from other companies I had used in the past like Legal zoom and the whole thing always felt so automated. Yes, granted Legal zoom probably have way more clients than Lawtrades and as such would not be feasible for their management to call everyone, however, that was a nice touch which I do appreciate. I will definitely be heading back to Lawtrades whenever I require legal assistance.”


Tamas, P. | ★★★★★

“Price. I know what I am paying instead of getting surprised. Transparent pricing I know what each bit costs instead of getting a big bill and not knowing what parts cost what and how much was for service vs hard fees such as filing fees. Also things progressed rapidly.”


Yash, P. | ★★★★★

“Amazing service, i cant get over texting to get a lawyer. it’s revolutionary and can legitimately improve the US justice system for people with no access to quality lawyers.”


Janet, S. | ★★★★★

“Quick and easy, I used LawTrades and worked with attorney Jonathan Hood to review a NDA. I got my questions answered right away. Arman was a great help making the connection. Would highly recommend the service.”