subscription shareholder agreement

Significant issues in respect of subscripttion cum shareholder agreement depends on the objective and purpose of the agreement and investor and company’s profile, status and various other issues which differs case to case.

In a comprehensive SSA following issues are covered:

CONDITIONS PRECEDENT AND CONDITIONS SUBSEQUENT- before and after the investment

REPRESENTATIONS AND WARRANTIES – by investor and the company/promoters

SUBSCRIPTION AND CLOSING

INVESTOR SHARES

EXIT- route, time etc for exit of investment…

COVENANTS - by investor and the company/promoters

CONDUCT OF BUSINESS UPTO CLOSING

MANAGEMENT OF THE COMPANY

DECISION MAKING BY THE BOARD

DECISION MAKING PRINCIPLES OF THE SHAREHOLDERS

VOTING AGREEMENT

BORROWINGS BY THE COMPANY

TRANSFER OF SHARES AND ISSUE OF SHARES – Lock in period, right of first refusal etc

ISSUE OF FURTHER SHARES

INDEMNITY

TERM AND TERMINATION

EFFECTS OF TERMINATION

NON COMPETE

CONFIDENTIALITY

DISPUTE RESOLUTION

FORCE MAJEURE

AMENDMENT

SEVERABILITY

WAIVERS

NOTICES

EXCLUSION OF ASSIGNMENT

GOVERNING LAW AND JURISDICTION

Regards

thanks

what precautions has the promoter should take as against the investor

That would depend on your business and objective of the agreement, sometime its strategic partnership, sometime you just drag on with any investor in need of fund. Most of the time it is investor who has a major say in SSA, promoters have to be particularly diligent on providing Exit route to investor, return on investment clause, voting and approvals particularly wherein you will need approvals of Investor due to their share holding, rights of promoters etc.

thanks for throwing light on the subject