A share purchase agreement defines the operation of the investment and specifies that a share subscription contract would be necessary if the company wants to raise funds and in particular by issuing shares, by not diluting the share of the owners. He uses that money for his own purposes. Normally, the founders of the company use their own money at the beginning of the business, but ultimately, the founders must look for money from angel investors or friends or strangers who must be spent in exchange for shares for the investment. When one of the founders sells his shares, a share purchase agreement is executed to record the transfer between the founders of the sale and the incoming investor. In such cases, the consideration is paid to the founders and that part of the money is not invested in the company. But if the company is not willing to dilute the already held stake of investors and founders, then a SSA is preferred. Preference is also given in the early stages when the founders do not want to sell their shares so early. Upon completion of this agreement, the person who subscribes to the shares becomes the shareholder of the company. This can be done to raise capital either through the public offering or through private placement. An equity subscription agreement is in fact an agreement in which the agreement is reached between the company and the investor, which involves the acquisition of ownership of the company through the issuance of new shares. The acquisition of a business may involve either the acquisition of existing securities or the issuance of new shares.

Acquisition by acquisition of securities is called a „share purchase agreement“ and the acquisition by issue of new shares is called a „share purchase agreement.“ As part of the Share Subscription Agreement (SSA), the company intends to issue new shares so that the founders do not dilute their ownership. It is actually a promise from a potential shareholder to pay money to a company in exchange for a certain number of shares at a certain price. A share exchange agreement must include the number of shares issued by the shareholder, as well as the order and manner in which the funds are advanced. Sometimes the SSA better defines the provisions of a terminology sheet. The dilution rights provide for an adjustment of the investor`s interest when new shares are issued to third parties with a lower valuation than the investor has invested in. They will only be triggered when the company`s valuation has fallen during a subsequent funding cycle, called a down-round. Let`s understand that by an example. Consider a company that holds a total of 500 issued shares of the face value of Rs.10. Of the 500 shares, one investor subscribed 100 shares at 60 Rs. per share and valued the company`s shares with 500x 60 – Rs 30,000. When your startup takes over, you`ll need a number of documents before the money falls into your corporate bank account.

An equity subscriber is a document you may need. While not all increases require this agreement, it is important that the founders know when it is necessary (and not) necessary to have one. Share subscription contracts can vary considerably depending on the needs of the parties and the types of shares that are underwritten, however, common clauses: Share subscription agreement is an agreement that is issued between the company and the subscriber of the new shares by the company. If a company wants to issue new shares of the company, they go for a share subscription contract. The most important point that we need to consider in the discussion of the share exchange contract is that when a company issues new shares, it can lead to a dilution of the share of shares already held by shareholders. When a new investor intends to invest, the company may issue shares at the same valuation or higher valuation, subject to the agreement of the existing investor for the issuance of new shares and for any waiver of their pre-emption rights.