Subscription agreement template

In the UK, a Subscription Agreement (also called a Share Subscription Agreement) is a contract where an investor agrees to subscribe for new shares in a private limited company, and the company agrees to issue those shares.

It records the key terms of the investment and the responsibilities of both parties, and usually sits alongside the company’s Articles of Association and, where relevant, a Shareholders’ Agreement.

Subscription Agreements are commonly used in formal funding rounds, such as Seed or Series A, where shares are being issued immediately.

An Advance Subscription Agreement is a simpler, alternative form of investment.  Rather than issuing shares straight away, the investor pays funds in advance, with the understanding that shares will be issued at a future funding round or on a long-stop date (usually 6-12 months later).

ASAs are increasingly used in early-stage UK fundraising because they can be SEIS/EIS compatible (unlike convertible loans), and allow a company to raise money quickly without agreeing a full valuation upfront.

You can view our Advance Subscription Agreements here.

A Subscription Agreement is typically used when:

• a private limited company is issuing new shares to raise capital.
• investors are participating in a priced funding round, such as Seed, Series A or later funding round.
• there’s a need to clearly document the terms of investment, warranties and any conditions that must be met before completion.

In contrast, an Advance Subscription Agreement may be used before a funding round, to bring in investment quickly while delaying share allotment  – often to preserve SEIS/EIS tax relief for early investors.

The key clauses in a Subscription Agreement for an English private limited company typically include:

• Subscription details – the number and type of shares (e.g. ordinary or preference) and the price per share.
• Payment mechanics – when and how the investment will be paid.
• Conditions precedent – any steps to be completed before shares are issued (e.g. SEIS/EIS advance assurance, shareholder resolutions).
• Completion – how and when the new shares will be allotted, entries made in the register of members, and filings made at Companies House.
• Company warranties – covering matters like corporate authority, share capital, accuracy of accounts, ownership of assets and IP and tax.
• Liability limitations – legal limitations on the liability of the Company and any other person giving the warranties.
• Governing law – typically English law.

Advance Subscription Agreements are shorter and more streamlined, but may still include:

• the amount being invested as an advance subscription.
• a discount or valuation cap for the investor when shares are issued.
• a defined trigger event (such as the next funding round or a long-stop date).
• basic warranties from the company.

At PaperRock, we offer a range of expertly drafted templates for different funding scenarios:

• standard Subscription Agreement – suitable for issuing new ordinary shares during a funding round.
• combined Investment & Shareholders’ Agreement – includes both investment terms and shareholder rights/governance.

Advance Subscription Agreement (ASA) – for early-stage investments made in advance of a future round, typically to support SEIS/EIS.