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Common Stock Subscription Agreement Template for India

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Key Requirements PROMPT example:

Common Stock Subscription Agreement

"I need a Common Stock Subscription Agreement for a Series A investment round where a venture capital firm is investing INR 50 crores for 20% equity, including standard VC rights and board seat provisions, with closing expected by March 2025."

Document background
The Common Stock Subscription Agreement is essential for companies raising capital through equity investments in India. It is commonly used when a company wishes to issue new shares to investors, whether they are individual investors, venture capital firms, or institutional investors. The document must comply with Indian corporate law, particularly the Companies Act 2013, SEBI regulations for listed companies, and FEMA regulations for foreign investments. It typically includes critical information such as the number and price of shares being issued, payment terms, representations and warranties, and various conditions that must be met before the share issuance can be completed. This agreement is fundamental to protecting both the company's and investors' interests by clearly documenting the terms of the investment and ensuring regulatory compliance.
Suggested Sections

1. Parties: Identifies the Company and the Subscriber(s) with their complete legal names and addresses

2. Background: Explains the context of the share subscription, including company's authorized share capital and the subscriber's intention to invest

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes rules of interpretation

4. Subscription and Allotment: Details of the shares being subscribed to, including number, class, and price per share

5. Payment Terms: Specifies the subscription amount, payment method, and timeline for payment

6. Conditions Precedent: Lists conditions that must be satisfied before share allotment

7. Closing: Describes the closing process, including timing and deliverables

8. Company Representations and Warranties: Company's statements about its legal status, authority, and business condition

9. Subscriber Representations and Warranties: Subscriber's statements about their capacity and authority to enter into the agreement

10. Covenants: Ongoing obligations of both parties

11. Indemnification: Provisions for compensating parties for losses due to breaches

12. Confidentiality: Obligations regarding protection of confidential information

13. Notices: Process for formal communications between parties

14. Governing Law and Jurisdiction: Specifies Indian law as governing law and relevant jurisdiction for disputes

15. General Provisions: Standard boilerplate provisions including amendments, waivers, and severability

Optional Sections

1. Tag-Along Rights: Include when minority shareholders need protection in case of majority stake sale

2. Drag-Along Rights: Include when majority shareholders want the right to force minority shareholders to join in a sale

3. Anti-Dilution Protection: Include when subscribers need protection against future dilution of their shareholding

4. Board Nomination Rights: Include when subscribers are to have rights to nominate directors

5. Foreign Investment Compliance: Include when subscribers include non-resident investors

6. Information Rights: Include when subscribers require specific rights to company information beyond statutory requirements

7. Exit Rights: Include when subscribers require specific exit mechanisms or IPO rights

Suggested Schedules

1. Schedule 1 - Company Information: Details of company incorporation, directors, share capital structure

2. Schedule 2 - Subscription Details: Detailed breakdown of shares being subscribed, including share certificate numbers and consideration

3. Schedule 3 - Conditions Precedent: Detailed list of conditions to be satisfied before closing

4. Schedule 4 - Closing Checklist: List of documents and actions required at closing

5. Schedule 5 - Company Warranties: Detailed company representations and warranties

6. Schedule 6 - Disclosure Schedule: Company's disclosures against the warranties

7. Appendix A - Board Resolution: Copy of board resolution approving the share issuance

8. Appendix B - Shareholders' Resolution: Copy of shareholders' resolution if required for the share issuance

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈ˰æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

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Technology

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Relevant Teams

Legal

Finance

Corporate Development

Compliance

Executive Leadership

Investment

Company Secretarial

Treasury

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Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Secretary

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Investment Banker

Private Equity Manager

Venture Capital Manager

Compliance Officer

Company Secretary

Director of Finance

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Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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