Subscription Agreement Template for South Africa

A Subscription Agreement sets out the terms when investors buy shares or other securities in a South African company. It's the key contract that details how much they're investing, what they're getting in return, and when the deal will close.

Beyond just outlining the price and number of shares, these agreements protect both sides by spelling out important rights, company warranties, and compliance with South African Companies Act requirements. They typically include specifics about dividend rights, voting powers, and what happens if the company needs future funding rounds.

Use a Subscription Agreement when your company needs to bring in new investors or raise capital through share offerings. This becomes essential during funding rounds, private placements, or when adding strategic investors to your South African business venture.

The timing is crucial - put this agreement in place before any money changes hands or shares are issued. It's particularly important for startups seeking seed funding, established companies planning expansions, or any business restructuring its shareholding under the Companies Act. Having it ready before investor negotiations helps avoid disputes and ensures regulatory compliance.

• Advance Subscription Agreement: Used for future share rights, common in startup funding where shares will be issued later at a preset discount
• Shares Subscription Agreement: Standard form for immediate share purchases, detailing current shareholding terms and conditions
• Investment Subscription Agreement: More complex version for larger investments, including detailed warranties and investor protections
• Subscription Service Agreement: For recurring service subscriptions rather than share investments
• Subscription License Agreement: Focuses on software or intellectual property access rights through subscription models

• Private Companies: Issue Subscription Agreements when raising capital or bringing in new shareholders, often during growth phases or expansions
• Investors: Review and sign these agreements when purchasing shares, including individual angel investors, venture capital firms, and institutional investors
• Corporate Lawyers: Draft and customize the agreements to comply with South African Companies Act requirements and protect client interests
• Company Directors: Negotiate terms and sign on behalf of the issuing company, taking on personal liability for representations made
• Company Secretaries: Maintain records, ensure CIPC compliance, and update share registers after agreement execution

• Company Details: Gather your company's registration documents, share structure, and valuation details from CIPC records
• Investment Terms: Define share price, number of shares, and any special rights or restrictions attached
• Due Diligence: Collect financial statements, tax clearance certificates, and material contracts
• Shareholder Approval: Check your MOI for existing shareholder rights and required approval processes
• Compliance Check: Review BEE requirements, exchange control regulations, and Companies Act provisions
• Template Selection: Use our platform to generate a legally compliant Subscription Agreement tailored to your specific needs

• Parties and Identifiers: Full legal names, registration numbers, and addresses of the company and subscribers
• Share Details: Class, quantity, price per share, and total subscription amount in Rand
• Payment Terms: Clear payment instructions, deadlines, and bank account details
• Warranties: Company representations about its status, operations, and compliance with laws
• Subscriber Declarations: Confirmations about financial capacity and understanding of investment risks
• Regulatory Compliance: References to Companies Act, BEE requirements, and exchange control regulations
• Execution Requirements: Signature blocks, witness provisions, and board resolution references

A Subscription Agreement differs significantly from a Asset Purchase Agreement in several key ways, though both involve business transactions. Let's explore the main differences:

• Investment Focus: Subscription Agreements deal with new share issuance and direct company investment, while Asset Purchase Agreements cover the sale of specific business assets or properties
• Ownership Structure: Subscription Agreements create new shareholding relationships and modify company ownership, whereas Asset Purchase Agreements transfer existing assets without changing corporate structure
• Regulatory Requirements: Subscription Agreements must comply with South African Companies Act share capital rules, while Asset Purchase Agreements focus on transfer of title and VAT implications
• Future Obligations: Subscription Agreements often include ongoing shareholder rights and obligations, but Asset Purchase Agreements typically conclude once the asset transfer is complete