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Subscription And Shareholders Agreement

Subscription And Shareholders Agreement Template for Pakistan

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Key Requirements PROMPT example:

Subscription And Shareholders Agreement

"I need a Subscription and Shareholders Agreement for my Pakistani tech startup, where a venture capital firm is investing PKR 50 million for a 25% stake, with specific provisions for board representation and veto rights on major decisions."

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Document background
The Subscription and Shareholders Agreement is a fundamental document in Pakistani corporate law, typically used when a company is seeking new investment while simultaneously establishing the framework for shareholder relationships. This document is essential in situations involving capital raising, private equity or venture capital investment, or strategic corporate investments. It combines elements of both a share subscription agreement (dealing with the immediate investment) and a shareholders agreement (governing ongoing relationships), making it particularly efficient for companies seeking to address both aspects in a single document. The agreement must comply with Pakistani legislation, particularly the Companies Act 2017, Securities Act 2015, and Contract Act 1872. It includes detailed provisions on share subscription mechanics, warranties, board composition, shareholder rights and obligations, transfer restrictions, and exit mechanisms. This type of agreement is particularly valuable for growing companies, startups seeking investment, and any business looking to bring in new shareholders while protecting the interests of all parties involved.
Suggested Sections

1. Parties: Identification of all parties to the agreement including the company, existing shareholders, and new subscribers

2. Background: Context of the transaction, company information, and purpose of the agreement

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Subscription of Shares: Details of share subscription, including number, class, price, and payment terms

5. Completion: Conditions precedent, completion obligations, and timing for the subscription

6. Warranties and Representations: Warranties given by the company, existing shareholders, and subscribers

7. Board Composition and Management: Structure and appointment rights for the board of directors

8. Shareholder Rights and Obligations: Key rights including voting, dividends, and information rights

9. Transfer Restrictions: Limitations on share transfers and process for permitted transfers

10. Reserved Matters: Decisions requiring special approval from specific shareholders or board members

11. Exit Rights: Provisions for IPO, drag-along, tag-along rights, and other exit mechanisms

12. Confidentiality: Obligations regarding confidential information

13. Dispute Resolution: Process for resolving disputes including jurisdiction and governing law

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

Optional Sections

1. Anti-dilution Rights: Protection for investors against future dilution of shareholding, used when dealing with sophisticated investors

2. Pre-emptive Rights: Rights of first refusal on new share issues, optional but common for protecting existing shareholders

3. Founder Commitments: Specific obligations for founders including non-compete and commitment periods, used when founders are key to business

4. Strategic Rights: Special rights for strategic investors such as first right to supply or purchase, used in industry-specific contexts

5. Employee Share Scheme: Framework for employee share ownership, included if company plans to implement ESOP

6. Deadlock Resolution: Specific procedures for resolving deadlock situations, important for 50-50 joint ventures

7. Put and Call Options: Rights to force purchase or sale of shares under specific circumstances

8. Islamic Finance Compliance: Additional provisions ensuring Shariah compliance, if required by any parties

Suggested Schedules

1. Share Capital and Shareholding Structure: Detailed breakdown of share capital, classes of shares, and shareholding pattern

2. Completion Obligations: Detailed list of actions and documents required for completion

3. Company Warranties: Comprehensive list of warranties given by the company

4. Subscriber Warranties: Warranties given by the subscribing shareholders

5. Reserved Matters List: Detailed list of matters requiring special approval

6. Business Plan: Initial business plan and key milestones

7. Form of Deed of Adherence: Template for new shareholders joining the agreement

8. Board Procedures: Detailed procedures for board meetings and decision-making

9. Tag and Drag Terms: Detailed mechanics of tag-along and drag-along rights

10. Valuation Principles: Agreed methods for share valuation in various scenarios

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Affiliate
Anti-dilution Rights
Articles of Association
Board
Business
Business Day
Business Plan
Call Option
Completion
Completion Date
Conditions Precedent
Confidential Information
Deed of Adherence
Director
Drag-along Rights
Encumbrance
Event of Default
Exit Event
Fair Market Value
Financial Year
Fully Diluted Share Capital
Group
Initial Public Offering (IPO)
Intellectual Property Rights
Investment Amount
Key Management
Material Adverse Effect
Memorandum of Association
New Securities
Ordinary Resolution
Parties
Pre-emptive Rights
Put Option
Qualified IPO
Reserved Matters
SECP
Share Capital
Shareholders
Special Resolution
Subscription Price
Subscription Shares
Tag-along Rights
Territory
Transfer
Valuation
Warranties
Clauses
Interpretation
Share Subscription
Payment Terms
Conditions Precedent
Completion Obligations
Warranties and Representations
Board Composition
Director Appointment Rights
Management Rights
Information Rights
Reserved Matters
Pre-emptive Rights
Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Anti-dilution Protection
Exit Rights
Put Option
Call Option
Non-compete
Non-solicitation
Confidentiality
Dividend Policy
Share Valuation
Deadlock Resolution
Default
Termination
Dispute Resolution
Governing Law
Notices
Assignment
Amendment
Severability
Entire Agreement
Force Majeure
Relevant Industries

Technology and Software

Manufacturing

Financial Services

Healthcare

Real Estate

E-commerce

Telecommunications

Energy and Utilities

Professional Services

Retail

Agriculture

Education

Media and Entertainment

Logistics and Transportation

Construction

Relevant Teams

Legal

Corporate Finance

Compliance

Board of Directors

Executive Management

Investment

Corporate Governance

Risk Management

Business Development

Company Secretariat

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Investment Manager

Board Director

Managing Director

Compliance Officer

Business Development Manager

Investment Analyst

Corporate Finance Manager

Private Equity Manager

Venture Capital Manager

Risk Manager

Company Founder

Shareholder Relations Manager

Industries
Companies Act, 2017: The primary legislation governing company formation, operation, and management in Pakistan. It covers shareholder rights, share transfers, corporate governance, and company obligations.
Contract Act, 1872: Governs the basic principles of contract formation, validity, and enforcement in Pakistan, essential for the agreement's binding nature.
Securities Act, 2015: Regulates securities offerings, transfers, and related matters, particularly relevant for share subscription aspects.
Foreign Exchange Regulation Act, 1947: Relevant if foreign shareholders are involved, governing foreign investment and repatriation of funds.
Stamp Act, 1899: Determines the stamp duty requirements for executing and registering the agreement in Pakistan.
Income Tax Ordinance, 2001: Relevant for tax implications of share transfers, dividend distributions, and capital gains.
Competition Act, 2010: May be relevant if the subscription involves substantial shareholding or could affect market competition.
Securities and Exchange Commission of Pakistan Act, 1997: Establishes the regulatory framework for corporate sector and capital markets supervision.
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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