Stock Subscription Agreement for Nigeria

Stock Subscription Agreement Template for Nigeria

A Stock Subscription Agreement under Nigerian law is a legally binding contract between a company and an investor, documenting the terms and conditions under which the investor agrees to purchase newly issued shares in the company. This document, governed by Nigerian law including the Companies and Allied Matters Act (CAMA) 2020, outlines crucial details such as the number and class of shares being issued, purchase price, payment terms, representations and warranties, and conditions precedent to closing. It serves as a critical instrument for both private and public companies raising capital in Nigeria's dynamic business environment, ensuring compliance with local regulatory requirements while protecting the interests of both the issuing company and the subscriber.

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What is a Stock Subscription Agreement?

The Stock Subscription Agreement is a fundamental document used in Nigerian corporate transactions when a company issues new shares to investors. This agreement, essential for both private and public companies operating under Nigerian law, particularly the Companies and Allied Matters Act (CAMA) 2020, details the terms under which an investor subscribes to new shares in a company. It's commonly used in various scenarios including initial capital raises, subsequent funding rounds, and strategic investments. The document typically includes detailed provisions on share price, payment terms, representations and warranties, conditions precedent, and completion mechanics. It must comply with Nigerian regulatory requirements, including those set by the Corporate Affairs Commission and, where applicable, the Securities and Exchange Commission. The agreement serves as a crucial tool for documenting the rights and obligations of both the issuing company and the subscriber, while ensuring proper corporate governance and regulatory compliance in the Nigerian business context.

What sections should be included in a Stock Subscription Agreement?

1. Parties: Identification of the Company and the Subscriber(s), including full legal names and addresses

2. Background: Context of the transaction, including company's authorized share capital and purpose of the subscription

3. Definitions: Key terms used throughout the agreement, including technical and legal definitions

4. Subscription and Payment Terms: Details of shares being subscribed to, including class, number, price per share, and total consideration

5. Payment Mechanics: Timeline and method of payment, including bank details and payment schedule if applicable

6. Conditions Precedent: Prerequisites that must be satisfied before the subscription becomes effective

7. Completion: Actions to be taken at completion, including issuance of share certificates and updating corporate records

8. Representations and Warranties: Statements of fact by both the Company and Subscriber regarding their capacity and authority

9. Company Covenants: Ongoing obligations of the Company regarding the subscribed shares and corporate governance

10. Subscriber Covenants: Commitments and obligations of the Subscriber

11. Termination: Circumstances under which the agreement can be terminated and consequences

12. Governing Law and Jurisdiction: Specification of Nigerian law as governing law and jurisdiction for disputes

13. Notices: Process for formal communications between parties

14. General Provisions: Standard boilerplate clauses including entire agreement, amendments, and severability

What sections are optional to include in a Stock Subscription Agreement?

1. Foreign Investment Provisions: Required when subscriber is a foreign investor, addressing NIPC requirements and forex considerations

2. Pre-emptive Rights: Optional provisions giving existing shareholders right of first refusal on future share issues

3. Tag-Along Rights: Optional provisions allowing minority shareholders to join in sale of shares by majority shareholders

4. Drag-Along Rights: Optional provisions allowing majority shareholders to force minority shareholders to join in sale

5. Anti-dilution Protection: Optional provisions protecting investors from dilution in future funding rounds

6. Board Representation: Optional provisions granting subscriber right to appoint board members

7. Information Rights: Optional provisions specifying subscriber's rights to company information and financial reports

8. Dividend Rights: Optional specific provisions regarding dividend entitlements and policies

What schedules should be included in a Stock Subscription Agreement?

1. Schedule 1 - Share Capital Structure: Details of company's existing share capital structure pre and post-subscription

2. Schedule 2 - Subscription Details: Detailed breakdown of shares being subscribed to, including class rights and privileges

3. Schedule 3 - Company Information: Key corporate information including certificates of incorporation, permits, and licenses

4. Schedule 4 - Completion Requirements: Checklist of documents and actions required for completion

5. Schedule 5 - Corporate Resolutions: Copies of relevant board and shareholder resolutions approving the subscription

6. Schedule 6 - Form of Share Certificate: Template of share certificate to be issued

7. Appendix A - Disclosure Letter: Company's disclosures against warranties

8. Appendix B - Compliance Certificates: Relevant regulatory and compliance certificates

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

Nigeria

Publisher

Genie AI

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Technology

Manufacturing

Real Estate

Energy and Natural Resources

Healthcare

Agriculture

Telecommunications

Consumer Goods

Infrastructure

Professional Services

Education

Mining

Retail

Transportation and Logistics

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Investment

Corporate Development

Board of Directors

Executive Management

Corporate Finance

Business Development

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

General Counsel

Corporate Secretary

Investment Director

Legal Counsel

Finance Director

Compliance Officer

Investment Manager

Corporate Attorney

Board Director

Managing Director

Investment Analyst

Corporate Finance Manager

Business Development Director

Industries
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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