Investment and Shareholders Agreement: established business single investor
Combined investment and shareholders agreement for the investment by a single investor in an established business. The agreement covers the investment transaction and also acts as the shareholders agreement between the investor and the founders of the company.
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When do I use this document?
- for an investment by a single investor 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 single investor
- 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 45 pages
- subscription: mechanism and terms for the subscription for shares by the investor
- conditions: conditions to the closing of the investment (if applicable)
- completion: completion of the investment, including the issue of shares to the investor and payment by the investor
- 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
- directors:
- investor director: the investor’s 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 investor and other shareholders
- information rights: rights to information for the investor and other shareholders about the company and its finances
- restrictive covenants: restrictions on the founders from competing with the company and soliciting 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 a single investor in an established business, see
- Subscription Agreement – established business single investor
- Shareholders Agreement – established business single investor
For a combined Investment & Shareholders Agreement for an established business with multiple investors, see
For combined Investment & Shareholders Agreements for a start up business, see
When do I use this document?
- 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
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Updated by a lawyer on 02/07/2025
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