The Shares Subscription Agreement is a crucial document used in South African corporate transactions when a company wishes to issue new shares to raise capital or bring in new investors. This agreement, governed by South African law including the Companies Act 71 of 2008 and Financial Markets Act 19 of 2012, sets out the complete arrangement between the company and the subscriber(s). It typically includes detailed provisions about the share subscription process, payment terms, conditions precedent, warranties and representations, and completion mechanics. The document is essential for both private and public companies seeking to expand their capital base, implement employee share schemes, or facilitate strategic investments. The agreement must comply with South African regulatory requirements, including exchange control regulations if foreign investors are involved, and may need to address B-BBEE considerations in certain cases.
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1. Parties: Identification of the Company issuing shares and the Subscriber(s)
2. Background: Context of the transaction, including company status, share capital structure, and purpose of the subscription
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Subscription: Details of shares being subscribed for, including class, number, and price per share
5. Payment Terms: Terms and method of payment for the subscription shares
6. Conditions Precedent: Conditions that must be satisfied before the subscription becomes effective
7. Completion: Mechanics and timing of the subscription completion, including actions required by each party
8. Warranties and Representations: Standard warranties by both the Company and the Subscriber
9. Company Undertakings: Commitments and obligations of the Company pre and post-completion
10. Subscriber Undertakings: Commitments and obligations of the Subscriber pre and post-completion
11. Confidentiality: Obligations regarding confidential information
12. Notices: Process and requirements for formal communications between parties
13. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and entire agreement
1. Tag-Along Rights: Include when minority shareholders need protection through the right to join in sale of shares by majority
2. Drag-Along Rights: Include when majority shareholders need the right to force minorities to join in a sale
3. Anti-dilution Protection: Include when subscribers need protection against future share issues at lower valuations
4. Board Representation: Include when subscriber is to have right to appoint directors
5. Multiple Closings: Include for transactions with multiple subscription tranches
6. Dividend Rights: Include when special dividend rights attach to subscription shares
7. Pre-emptive Rights: Include when subscribers need rights to participate in future share issues
8. Share Transfer Restrictions: Include when specific restrictions on transfer of shares are required
1. Share Capital Structure: Details of company's existing share capital and shareholding
2. Subscription Details: Detailed breakdown of shares being subscribed for and payment calculations
3. Conditions Precedent: Detailed list of all conditions precedent and required evidence
4. Company Warranties: Comprehensive list of company warranties
5. Completion Requirements: Detailed checklist of completion deliverables and actions
6. Form of Board Resolutions: Pro forma board resolutions for completion
7. Form of Shareholders' Resolution: Pro forma shareholders' resolutions if required
8. Disclosure Schedule: Company's disclosures against warranties
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