Due diligence checklist: share purchase

When do I use this document?

• for an investment by multiple investors in an established business
• as a combined subscription and shareholders agreement
• for full-form warranties to reflect the trading history of the company and any subsidiaries
• in conjunction with new Articles of Association – for Paper Rock’s accompanying Articles of Association, see Articles of Association – established business multiple investors
• for investment in a private limited company incorporated in England and Wales

What are the key features?

• full form investment/subscription and shareholders agreement (ISHA)
• 31 clauses and 5 schedules over 46 pages
• subscription: mechanism and terms for the subscription for shares by the investors
• conditions: conditions to the closing of the investment (if applicable)
• completion: completion of the investment, including the issue of shares to the investors and payment by the investors
• warranties: warranties from the company and, if agreed, the founder shareholders
• limitations on liability: limitations on potential liability under the warranties of the company and, if giving warranties, the founders
• investor rights: exercisable by a majority of the investors
• directors:
  • investor director: investors’ entitlement to appoint a director
  • other directors: the founder shareholder(s) rights to appoint a director
• board proceedings: how proceedings of the board will be conducted
• future share issues: pre-emption rights on the issue of new shares
• share transfers: rules governing the transfer of shares, including:
  • pre-emption rights on share transfers
  • compulsory transfer events, including founder good and bad leaver clauses
  • tag-along and drag-along rights
• reserved matters: matters requiring prior approval from the investors (acting by investor majority) and other shareholders
• information rights: rights to information for the investors and other shareholders about the company and its finances
• restrictive covenants: restrictions on the founders from competing with the company andsoliciting the company’s customers, suppliers and employees

What other documents are available?

For separate documents consisting of a Subscription Agreement and Shareholders Agreement for investment by multiple investors in an established business, see

• Subscription Agreement – established business multiple investors
• Shareholders Agreement – established business multiple investors

For a combined Investment & Shareholders Agreement for an established business with a single investor, see

• Investment and Shareholders Agreement – established business single investor

For combined Investment & Shareholders Agreements for a start up business, see

• Investment and Shareholders Agreement – start up business single investor
• Investment and Shareholders Agreement – start up business multiple investors