Advanced Subscription Agreement (public)
This Advance Subscription Agreement (ASA) is designed for companies seeking investment before a fixed valuation can be established. An investor provides funds in exchange for equity (shares) to be issued at a future date, typically upon the company's next priced funding round or a specified longstop date. It clarifies that an ASA is not a loan and does not accrue interest.
ADVANCE SUBSCRIPTION AGREEMENT
\ DRAFTING NOTES
An Advance Subscription Agreement (ASA) is typically used when a company wants to take investment but isn't yet in a position to fix a valuation. By entering into an ASA, an investor agrees to invest in the company in exchange for equity (shares), but rather than the equity being issued immediately, the parties agree that it will be issued at an agreed point in the future.
As a general rule, the ASA will "convert" into equity at the time of the company's next priced round, and at the valuation attributed to the company at the time of that round (subject to a valuation cap). However, it would also convert if the company is sold before its next round, or at an agreed date in the future (if the next round takes longer than expected).
An ASA is not a loan, it does not carry interest and it will never need to be repaid.
It is possible for a company to issue ASAs to a number of separate investors at the same time, using a separate agreement for each investor. Although the financial terms attached to the ASA will be identical, regardless of the type of investor, certain provisions contained in this template are specific to institutional investors (typically as lead investor), and a number of others are not appropriate for SEIS/EIS investors. Care should be taken to ensure all drafting notes and footnotes have been reviewed, with amendments and deletions made as directed. In particular, the company should ensure it is happy to give the warranties set out in clause 5.
This document does not constitute legal or tax advice and no guarantee can be made that the ASA will be compliant with SEIS and/or EIS legislation. Parties should consult a lawyer or tax adviser if SEIS/EIS relief is to be relied upon
ADVANCE SUBSCRIPTION AGREEMENT
DATED
PARTIES
[subscriber name] of [subscriber address] (the "Subscriber"); and
[company name] LIMITED a company incorporated and registered in [company registered country] with company number [company number] and having its registered office at [company registered address] (the "Company"); and
[founder name] of [founder address] (the "Founder[s]").
INTRODUCTION
The Subscriber has agreed to make advance subscription funds available to the Company for the subscription for Subscription Shares (as defined below) and the Company has agreed to allot and issue the Subscription Shares to the Subscriber at a future date and on the terms more particularly described in this agreement.
IT IS AGREED AS FOLLOWS
DEFINITIONS
Terms defined in the articles of association adopted by the Company as at the date of this agreement shall have the same meaning in this agreement, unless the context requires otherwise or such terms are otherwise defined.
In this agreement:
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