In a share subscription agreement, it is said that the investor in exchange for an agreed investment amount has subscribed shares in the company. Then the company will issue these agreed shares to the investor. An investment contract is a contract between a company and its shareholders and an investor that regulates an investment project in the company. An investment contract should describe the terms of the investment and what the investor receives in return. In order for an investor to assess an investment opportunity, he must have all the relevant information about the company to decide whether the investment is profitable, how much he invests and what risks are related to the investment. The nature of the investment agreement you need depends on the nature of the transaction. The table below shows different types of investment transactions and the investment agreement associated with them. Investment agreements and shareholder agreements have different purposes for companies. They are both important, and one cannot replace the other. It is important for a company to have a shareholders` pact so that it can define the terms of the relationship between the company and its shareholders. It is not a transaction document and will not meet the terms of certain transactions.
When your business is raising capital, it is important to prepare an appropriate investment agreement to document the terms of the investment. If you need help preparing a shareholder contract or investment agreement, contact LegalVision`s business lawyers at 1300 544 755 or fill out the form on this page. It is typical that the closing conditions are linked to each subsequent investment tranche. This often involves you writing down your contract to clearly know what consideration the company receives in exchange for the issuance of shares. In the investment agreement, you usually see a liability clause (if a future capital purchaser is to be subject to the same conditions as the investment agreement). The investment agreement and the shareholders` pact will be two important instruments for managing investment and internal shareholder relations. Among the most important points covered by a shareholder pact is that deferred compensation is not an “investment agreement” per se, since the person does not receive equity in the company. The terms of an investment agreement are generally covered: the content of the investor rights agreement may include: in the case of investment contracts, the individual must not be a new shareholder, but may be a shareholder or an external investor. Guarantees are granted after the closing of a first tranche and sometimes after the closing of the following tranches. If, before the closing of a tranche, one of the guarantees provided by the guarantors is indeed false, it gives investors the right to sue the guarantors for breach of the guarantee.