Preference Share Subscription Agreement for the United Kingdom

Preference Share Subscription Agreement Template for England and Wales

A Preference Share Subscription Agreement is a legal document governed by English and Welsh law that sets out the terms under which an investor subscribes for preference shares in a company. It details the rights attached to the shares, including dividend rights, voting rights, and capital rights, as well as the conditions of subscription, warranties, and completion mechanics. The agreement ensures compliance with the Companies Act 2006 and other relevant legislation while protecting both the issuing company's and subscriber's interests.

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What is a Preference Share Subscription Agreement?

A Preference Share Subscription Agreement is commonly used when a company wishes to raise capital by issuing shares with preferential rights to dividends, capital returns, or both. Under English and Welsh law, this document is crucial for establishing the relationship between the company and preference shareholders, outlining specific rights and protections that differ from ordinary shares. The agreement typically includes detailed terms about dividend rates, payment priorities, voting rights, and redemption provisions. It's particularly relevant for companies seeking investment while maintaining existing voting control structures, and ensures compliance with the Companies Act 2006 and related regulations.

What sections should be included in a Preference Share Subscription Agreement?

1. Parties: Details of the Company issuing shares and the Subscriber(s)

2. Background: Context of the share issuance and company's authority to issue

3. Definitions and Interpretation: Key terms used throughout the agreement

4. Subscription: Core terms of the share subscription including number, class, and price of shares

5. Completion: Mechanics and timing of the subscription completion

6. Warranties: Standard warranties from both company and subscriber

7. Notices: Process for serving notices under the agreement

8. Governing Law and Jurisdiction: Confirmation of English law and courts' jurisdiction

What sections are optional to include in a Preference Share Subscription Agreement?

1. Conditions Precedent: Pre-completion conditions - used when completion is conditional on certain events or approvals

2. Anti-dilution Rights: Protection against future share issues - typically included when requested by sophisticated investors

3. Tag-along Rights: Right to join in sale of shares - commonly used in minority investment scenarios

4. Information Rights: Rights to receive company information - typically included for significant preference shareholders

What schedules should be included in a Preference Share Subscription Agreement?

1. Schedule 1 - Share Rights: Detailed terms of the preference shares including dividend rights, voting rights, and capital rights

2. Schedule 2 - Warranties: Detailed company and subscriber warranties

3. Schedule 3 - Completion Requirements: List of documents and actions required at completion

4. Schedule 4 - Form of Share Certificate: Template share certificate

5. Schedule 5 - Board Resolutions: Form of board resolutions approving the share issue

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Industries

Companies Act 2006: Primary legislation governing company law, including provisions for share capital, share issues, class rights, directors' duties, and pre-emption rights

Financial Services and Markets Act 2000 (FSMA): Key legislation covering financial promotion restrictions, prospectus requirements, and regulated activities provisions

Companies (Model Articles) Regulations 2008: Secondary legislation providing default articles of association for companies

Companies (Shares and Share Capital) Regulations 2009: Secondary legislation specifically dealing with shares and share capital matters

UK Listing Rules: Regulations applicable if the company is listed, governing public companies and their securities

Financial Services and Markets Act 2000 (Financial Promotion) Order 2005: Secondary legislation detailing specific rules around financial promotions

Articles of Association: Company's constitutional document defining existing share rights, transfer restrictions, and board powers regarding share issuance

Shareholders' Agreement: Existing agreement between shareholders that may contain restrictions on share issuance and consent requirements

Tax Legislation: Various tax laws affecting share subscriptions, including Stamp Duty, Income Tax, and Corporation Tax implications

Money Laundering Regulations 2017: Regulations requiring due diligence and source of funds verification for share subscriptions

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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