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What is an Equity Subscription Agreement?

Equity Subscription Agreement is a financial Agreement between the parties that deals with the sale and purchase of Equity Shares. The “Subscriber” purchases the Shares whereas the “Company” sells their shares. These are basically the additional shares that are invested by the “Subscriber” to provide capital to the Company. Equity Share Agreement contains the condition and the consideration foregoing of the mutual promises of both the parties to the contract. Where the Subscriber wants to invest the amount in the company by the way of equity share fixed by per share purchase price by the parties. The Subscriber of the equity share has the right to vote in the company, share profits and the value of equity share can be expressed per share purchase price or on face value.

Why needed?

It is one of the essential financial Agreement between the Subscriber and the Company which is needed while buying the equity shares of the company , it provides a legal consideration and consent to purchase the shares of the company at specified face value and also specify the responsibilities and liabilities of both the parties to the agreement. Without this Equity subscription Agreement the subscribers can not purchase and the Company can not sell its equity share.