Subscription letter Template for South Africa

A Subscription letter lets investors formally commit to buying shares or other securities in a company, often during private placements or initial public offerings in South Africa. This document outlines key details like the number of shares, price per share, and payment terms that the subscriber agrees to.

Under the Companies Act 71 of 2008, these letters help companies maintain proper records of share subscriptions and ensure compliance with JSE listing requirements. They protect both parties by clearly documenting the investment terms, payment obligations, and any special conditions attached to the share purchase agreement.

Use a Subscription letter when raising capital through private placements or public offerings in South Africa. This document becomes essential during funding rounds, especially when selling shares to sophisticated investors or institutional buyers who need formal investment documentation.

The timing often aligns with company growth phases, mergers and acquisitions, or expansion projects requiring new capital. Companies listed on the JSE particularly need these letters to comply with securities regulations and maintain transparent investor records. Having them ready before accepting investment commitments helps avoid delays in closing funding rounds and ensures legal compliance.

• Standard Private Placement: Basic Subscription letters used for private company fundraising, with standard terms and payment schedules.
• JSE Listed Company: More detailed versions meeting stock exchange requirements, including specific disclosure clauses and regulatory compliance statements.
• Rights Issue: Specialized formats for existing shareholders exercising their rights to purchase additional shares, often with preferential terms.
• Foreign Investment: Modified versions addressing exchange control regulations and Reserve Bank requirements for international investors.
• Venture Capital: Enhanced versions with detailed investor protection clauses, valuation metrics, and specific exit provisions.

• Company Directors: Authorize and sign Subscription letters on behalf of the issuing company, ensuring terms align with corporate strategy.
• Investors: Review and sign as subscribers, committing to purchase shares under specified terms and conditions.
• Corporate Lawyers: Draft and review the letters to ensure compliance with Companies Act requirements and JSE regulations.
• Company Secretaries: Maintain records, handle documentation, and ensure proper filing with relevant authorities.
• Investment Bankers: Coordinate private placements and manage the subscription process for larger offerings.

• Company Details: Gather accurate company registration information, share class details, and board resolutions authorizing the share issue.
• Investment Terms: Document the exact number of shares, price per share, and total subscription amount.
• Subscriber Information: Collect investor details, including FICA documentation and proof of funds.
• Payment Terms: Specify payment deadlines, bank account details, and any installment arrangements.
• Compliance Check: Verify alignment with Companies Act requirements and JSE regulations if applicable.
• Review Process: Use our platform to generate a legally compliant document, then validate all terms with key stakeholders.

• Party Details: Full legal names, registration numbers, and addresses of both company and subscriber.
• Share Information: Detailed description of share class, quantity, price, and total subscription amount.
• Payment Terms: Clear payment instructions, deadlines, and bank account details.
• Representations: Subscriber's confirmation of eligibility to invest and understanding of terms.
• Regulatory Compliance: References to relevant Companies Act sections and JSE requirements.
• Execution Block: Signature spaces, witness requirements, and date fields.
• Governing Law: Explicit statement that South African law governs the agreement.

A Subscription letter differs significantly from an Acceptance Letter in both purpose and legal effect within South African business law. While both documents formalize agreements, they serve distinct functions in corporate transactions.

• Primary Purpose: Subscription letters commit investors to purchasing specific shares or securities, while Acceptance letters confirm agreement to general business proposals or offers.
• Legal Framework: Subscription letters must comply with Companies Act share issuance requirements and JSE regulations; Acceptance letters follow basic contract law principles.
• Content Requirements: Subscription letters need detailed share information, payment terms, and regulatory disclosures; Acceptance letters typically contain simpler terms of agreement.
• Binding Effect: Subscription letters create immediate investment obligations and share ownership rights; Acceptance letters generally confirm existing arrangements or proposals.