Advance Subscription Agreement

Name: Advance Subscription Agreement - PaperRock Documents
SKU: INV019.001
Price: 45.00 GBP
Availability: InStock

Advance Subscription Agreement for investment in a private limited company. The amount invested will convert at a percentage discount to the price of the company’s next fundraise, subject (if agreed) to an agreed cap on the company valuation

as an advance subscription agreement between the company and a single investor
where the conversion price will be calculated as a percentage discount to the issue price for shares in the qualified investment round
if agreed, where there is an agreed valuation cap on the company’s valuation

What are the key features?

advance subscription terms and payment
conversion on the occurrence of defined events, including a qualifying financing round, the sale of the company or on a longstop date
conversion price on a qualified financing round to be at an agreed percentage discount to the qualified financing round share price
if agreed, a cap on the valuation of the company for the purpose of calculating the conversion price
warranties regarding the investor’s compliance with Financial Services and Markets Act 2000 regime regarding financial promotions

What else do I need to know?

For detailed discussion regarding the purpose of advance subscription agreements and their benefits and disadvantages for investors and the company, click here.

Negotiating points

Prior to entering into this ASA, the parties will need to consider and agree:

discount rate: the discounted price per share (expressed as a percentage) at which the ASA investor will receive shares in the qualified financing round
valuation cap: if agreed, the cap on the valuation of the company for the purpose of calculating the price at which the advance subscription will convert into shares on a qualified investment round
default valuation: the default valuation of the company which will be used to calculate the conversion price of the advance subscription in circumstances where conversion occurs on the agreed longstop date or the company’s insolvency
longstop date: the longstop date on which (and in the absence of a prior qualifying financing round) the ASA will automatically convert into shares
qualified financing round: the minimum amount of funding which the company must raise before that funding round will count as the qualified financing round under the ASA which results in the conversion of the advance subscription into shares
subscription amount: the amount of the investor’s advance subscription

Description

When do I use this document?

if a shareholder has lost its original share certificate or it has been destroyed
if applicable, alongside a transfer of the shares covered by the lost or destroyed original certificate

What are the key features?

different forms of indemnity, depending on whether the shareholder is also transferring shares
alternative forms of indemnity, depending on whether the shareholder is an individual or a company

What else do I need to know?

What is a share certificate?

A share certificate is a document evidencing ownership of shares in a company. By law, shareholders are entitled to receive this certificate when they acquire shares, either through allotment or transfer.

What happens if a share certificate is lost or destroyed?

If a shareholder loses or destroys their certificate, they can ask the company for a replacement. To safeguard itself, the company will usually require a lost share certificate indemnity. This is a legal undertaking under which the shareholder agrees to cover any losses the company might face by issuing the replacement.

What risks does the indemnity protect against?

The indemnity protects the company from risks such as:

Duplicate Claims: If the original certificate reappears, someone else might claim ownership, causing disputes or financial loss.
Fraudulent Claims: A person could falsely claim to have lost the certificate and misuse the replacement, for example, by attempting to sell the shares unlawfully.
Administrative Errors: Mistakes in issuing a replacement or registering a transfer without the original certificate could lead to legal administrative errors.
Legal Liability: If a replacement certificate or transfer is improperly handled, the company might be held responsible for resulting losses.

Explanatory Guides

As with all of our document templates, your purchase will include access to clear explanatory guidance on the document and its use.

£45.00 exc VAT

Updated by a lawyer on 30/05/2025

Updated By a lawyer on 09/16/2024

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Advance Subscription Agreement