Subscription letter Template for Pakistan

A Subscription letter is a formal document investors use to confirm their commitment to buy shares or securities in a company going public or raising capital in Pakistan. It spells out key details like the number of shares being purchased, price per share, and payment terms that both parties agree to.

Under Pakistani securities regulations, this binding agreement protects both the company and its investors by clearly documenting the investment terms. Companies must include these letters when filing their IPO documents with the Securities and Exchange Commission of Pakistan, making them essential tools for transparent capital raising in Pakistani markets.

Use a Subscription letter when raising capital through share offerings in Pakistan, especially during IPOs or private placements. This document becomes crucial right before finalizing investment deals, as it formally captures the investor's commitment to purchase specific shares at agreed-upon terms.

The timing matters most when dealing with multiple investors or complex funding rounds. Pakistani companies need these letters ready before filing IPO documents with SECP, typically during the pre-listing phase. Having clear, signed Subscription letters helps avoid disputes about investment terms and streamlines the regulatory approval process.

• Basic Share Subscription: The standard version used for straightforward equity investments, covering essential terms like share quantity and price.
• IPO Subscription: Specifically designed for public offerings, with additional regulatory disclosures required by SECP.
• Private Placement: Used for direct share sales to specific investors, featuring more detailed terms and conditions.
• Rights Issue: Tailored for existing shareholders exercising their right to purchase additional shares.
• Convertible Note Subscription: Includes special provisions for debt that can convert to equity, common in startup funding.

• Issuing Companies: Businesses raising capital through share offerings, responsible for preparing accurate subscription terms and conditions.
• Investors: Both institutional and individual buyers committing to purchase shares at specified terms.
• Legal Counsel: Corporate lawyers who draft and review subscription letters to ensure compliance with SECP regulations.
• Investment Banks: Act as intermediaries in IPOs, helping structure the offering and manage subscription processes.
• Company Secretaries: Maintain official records and ensure proper execution of subscription documentation.

• Company Details: Gather complete legal name, registration number, and registered office address of the issuing company.
• Share Information: Document exact number of shares, price per share, and total subscription amount.
• Investor Details: Collect full legal name, NTN/CNIC numbers, and contact information of all subscribing parties.
• Payment Terms: Specify payment schedule, bank details, and any installment arrangements.
• Regulatory Compliance: Review current SECP requirements for share subscriptions and ensure all mandatory disclosures are included.
• Signature Authority: Confirm authorized signatories from both company and investor sides.

• Parties' Information: Full legal names, addresses, and registration/CNIC numbers of company and subscriber.
• Share Details: Precise description of shares, quantity, class, and price per share.
• Payment Terms: Clear payment schedule, method, and bank account details.
• Representations: Statements confirming subscriber's eligibility and company's authority to issue shares.
• Governing Law: Explicit reference to Pakistani law and SECP regulations.
• Execution Block: Designated spaces for authorized signatures, witnesses, and company seal.
• Compliance Statement: Declaration of adherence to Companies Act and relevant securities regulations.

A Subscription letter differs significantly from an Acceptance Letter in both purpose and legal effect within Pakistani corporate law. While both documents formalize agreements, their applications and implications vary considerably.

• Primary Purpose: Subscription letters specifically commit to purchasing shares or securities, while Acceptance letters broadly confirm agreement to any type of offer or proposal.
• Legal Framework: Subscription letters must comply with SECP regulations and Companies Act requirements for share issuance. Acceptance letters follow general contract law principles.
• Content Requirements: Subscription letters need detailed share specifications, payment terms, and regulatory disclosures. Acceptance letters typically contain simpler terms of agreement.
• Timing and Duration: Subscription letters remain active until share transfer completion, while Acceptance letters usually mark the immediate formation of a contract.