Subscription Agreement Template 2025

Professional subscription agreement template with comprehensive guide. Learn what a subscription agreement is, how to fill it out, and download our template designed by legal experts for investment rounds, private placements, and equity subscriptions.

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What is a Subscription Agreement?

Professional subscription agreement for investment rounds and private placements

A subscription agreement is a legal contract between a company and an investor for the purchase of securities in a private offering. It outlines the investment terms, investor representations and warranties, company disclosures, and conditions for the securities purchase, serving as the primary document that governs private placements and investment rounds. Subscription agreements are essential for documenting investor commitments, ensuring regulatory compliance, and protecting both companies and investors in securities transactions outside of public markets.

Subscription agreements serve as the foundation for private securities offerings by providing a comprehensive framework for investment transactions while ensuring compliance with federal and state securities laws. They enable companies to raise capital from accredited investors, angel investors, and institutional investors while providing legal protection through extensive representations, warranties, and disclosure requirements. These agreements are particularly important for startups, growing companies, and private equity transactions where companies need to access capital markets without the expense and complexity of public offerings.

📋 Key Components of a Subscription Agreement

  • Investment terms - amount, securities type, and price per share
  • Investor representations - accreditation status and investment suitability
  • Company disclosures - business information and risk factors
  • Closing conditions - requirements for completing the investment
  • Transfer restrictions - limitations on resale of securities
  • Regulatory compliance - securities law and exemption requirements
  • Subscription procedures - process for accepting and funding investment

Types of Securities Offerings and Investment Structures

Different types of securities offerings and investment structures
Offering Type Securities Issued Investor Requirements Common Applications
Regulation D 506(b) Equity or debt securities Accredited investors only Venture capital, private equity
Regulation D 506(c) Any securities Verified accredited investors General solicitation allowed
Regulation A+ Up to $75M annually Public and accredited investors Mini-IPOs, crowdfunding
Regulation CF Up to $5M annually General public investors Crowdfunding platforms
SAFE/Convertible Notes Convertible instruments Typically accredited investors Seed funding, bridge rounds

Private Placements (Regulation D)

SAFE and Convertible Note Offerings

Equity Securities Offerings

✅ Benefits of Subscription Agreements

  • Legal Protection: Comprehensive investor and company protections
  • Regulatory Compliance: Adherence to securities law requirements
  • Investment Documentation: Clear terms and conditions for investment
  • Risk Disclosure: Proper disclosure of investment risks and company information
  • Transfer Controls: Restrictions to maintain private offering exemptions

Essential Subscription Agreement Components

Essential subscription agreement components and investment documentation

Investment Terms and Securities Details

Investor Representations and Warranties

Company Representations and Disclosures

Securities Law Compliance Provisions

Subscription Process and Procedures

Rights and Preferences (for Preferred Stock)

⚠️ Common Subscription Agreement Pitfalls

  • Inadequate investor accreditation verification and documentation
  • Insufficient disclosure of company risks and material information
  • Failure to comply with applicable securities law exemptions
  • Missing or improper transfer restrictions and legends
  • Unclear or incomplete investment terms and conditions
  • Inadequate subscription process and investor qualification procedures

How to Fill Out a Subscription Agreement: Step-by-Step Guide

Professional completing subscription agreement documentation and investment paperwork
1
Define Investment Terms and Securities Details

Specify: Investment amount, securities type, and offering structure.

  • Identify type of securities being offered (common, preferred, convertible)
  • Set investment amount and price per share or conversion terms
  • Define total offering size and minimum investment amounts
  • Establish closing date and subscription deadline
  • Include use of proceeds and business purposes
2
Include Comprehensive Investor Representations

Document: Investor qualifications and suitability requirements.

  • Verify accredited investor status with supporting documentation
  • Confirm investment experience and financial sophistication
  • Establish investment intent and holding period understanding
  • Document financial capacity to bear investment risks
  • Include authority and legal capacity representations
3
Add Company Representations and Disclosures

Provide: Company information and material disclosures.

  • Corporate existence, authorization, and good standing
  • Financial statement accuracy and accounting representations
  • Material contract and business relationship disclosures
  • Litigation, regulatory, and compliance representations
  • Risk factor disclosures and business uncertainties
4
Establish Securities Law Compliance Framework

Ensure: Compliance with applicable securities regulations.

  • Identify specific securities law exemption being relied upon
  • Include transfer restrictions and resale limitations
  • Add required legends and stop transfer instructions
  • Address filing requirements and regulatory compliance
  • Include bad actor and disqualification provisions
5
Define Rights and Preferences (if applicable)

Specify: Special rights and preferences for preferred securities.

  • Liquidation preferences and priority distributions
  • Dividend rights and payment terms
  • Anti-dilution protection and adjustment mechanisms
  • Conversion rights and triggering events
  • Voting rights and protective provisions
6
Include Subscription Process and Legal Provisions

Add: Subscription procedures and legal protections.

  • Subscription acceptance and rejection procedures
  • Escrow arrangements and fund handling
  • Closing conditions and completion requirements
  • Dispute resolution and governing law provisions
  • Indemnification and risk allocation terms

⚠️ Securities Law and Regulatory Compliance

Subscription agreements involve complex federal and state securities laws that can result in significant liability for non-compliance. These agreements must comply with SEC regulations, state blue sky laws, and applicable exemption requirements. Professional legal advice from experienced securities attorneys is essential for proper offering structure, investor qualification, and regulatory compliance. Consider anti-fraud provisions, filing requirements, and ongoing compliance obligations for private offerings.

Investor Qualification and Verification Requirements

Investor qualification and verification process for subscription agreements

Accredited Investor Standards

Verification Requirements (Rule 506(c))

Sophisticated Investor Standards (Rule 506(b))

International and Offshore Investors

Institutional and Qualified Purchasers

Bad Actor Disqualification

💡 Investor Verification Best Practices

  • Implement standardized investor qualification procedures and documentation
  • Use third-party verification services for Rule 506(c) offerings
  • Maintain comprehensive investor files and qualification records
  • Update investor status for subsequent offerings and investments
  • Ensure bad actor diligence and disclosure compliance
  • Consider jurisdictional requirements for international investors

Frequently Asked Questions

Rule 506(b) allows sales to unlimited accredited investors plus up to 35 sophisticated non-accredited investors, but prohibits general solicitation. Rule 506(c) permits general solicitation and advertising but requires that all investors be accredited investors with verification of their accredited status. Rule 506(c) also requires "reasonable steps" to verify accredited investor status through income documentation, net worth verification, or third-party confirmation.

Verification methods include: (1) Reviewing tax returns, W-2s, and 1099s for income qualification, (2) Bank statements, brokerage statements, and appraisals for net worth, (3) Written confirmation from CPA, attorney, or registered broker-dealer, (4) Consumer credit reports from nationwide agencies, (5) Third-party verification services, and (6) Professional licenses (Series 7, 65, 82). The verification must be reasonable under the circumstances and completed within three months before the sale.

Transfer restrictions should include: (1) Securities are not registered and cannot be resold without registration or exemption, (2) Right of first refusal or co-sale rights for the company, (3) Minimum holding periods under Rule 144, (4) Restrictive legends on certificates, (5) Stop transfer instructions to transfer agents, (6) Tag-along and drag-along rights, and (7) Approval requirements for transfers to maintain exemption status. These restrictions help maintain the private offering exemption and provide liquidity controls.

Key disclosures include: (1) Business description and strategy, (2) Financial statements and condition, (3) Use of proceeds from the offering, (4) Risk factors and uncertainties, (5) Management and key personnel, (6) Material contracts and relationships, (7) Legal proceedings and regulatory matters, (8) Tax consequences of the investment, (9) Prior securities offerings and ownership, and (10)Exit strategy and liquidity limitations. The disclosure should be sufficiently detailed to allow investors to make informed investment decisions.

SAFE and convertible note subscriptions should address: (1) Conversion triggers (qualified financing, liquidity events, maturity), (2) Valuation caps and discount rates for investor protection, (3) Most favored nation provisions for future investor rights, (4) Pro rata participation rights in future rounds, (5) Information rights and reporting requirements, (6) For notes: interest rates, maturity dates, and default provisions, (7) Anti-dilution protection and adjustment mechanisms, and (8) Dissolution and liquidation preferences. These instruments provide flexible early-stage funding while deferring valuation discussions.

Non-compliance consequences include: (1) SEC enforcement actions and penalties, (2) State securities violations and sanctions, (3) Investor rescission rights and damage claims, (4) Criminal liability for willful violations, (5) Disqualification from future exemptions, (6) Disgorgement of proceeds and monetary penalties, (7) Injunctive relief preventing future offerings, and (8) Reputational damage and business disruption. Proper legal counsel and compliance procedures are essential to avoid these serious consequences.

International investors require consideration of: (1) Regulation S compliance for offshore transactions, (2) No U.S. solicitation or directed selling efforts, (3) Distribution compliance periods for resale restrictions, (4) Category-specific offering restrictions by jurisdiction, (5) FATCA reporting and withholding requirements, (6) Tax treaty benefits and withholding optimization, (7) Anti-money laundering and KYC procedures, and (8) Local securities law compliance in investor jurisdictions. Specialized legal counsel is recommended for international offerings.

Preferred stock subscriptions should include: (1) Liquidation preferences and participation rights, (2) Dividend rates and payment terms, (3) Anti-dilution protection (weighted average or full ratchet), (4) Conversion rights and automatic conversion triggers, (5) Voting rights and protective provisions, (6) Board representation and governance rights, (7) Information and inspection rights, (8) Tag-along and drag-along provisions, (9) Right of first refusal and co-sale rights, and (10) Registration rights for future liquidity. These terms define the economic and control rights of preferred investors.

Risk Factors and Due Diligence Considerations

Risk factors and due diligence considerations for subscription agreements

Business and Operational Risks

Financial and Liquidity Risks

Legal and Regulatory Risks

Investment-Specific Risks

Technology and Cybersecurity Risks

Due Diligence Areas

⚠️ Critical Risk Disclosure Requirements

  • Comprehensive disclosure of all material risks and uncertainties
  • Specific risks related to the company's business and industry
  • Investment-specific risks including liquidity and control limitations
  • Forward-looking statement disclaimers and projection risks
  • Regular updates on material changes and developments
  • Professional liability and D&O insurance coverage limitations

International and Tax Considerations

International and tax considerations for subscription agreements

Cross-Border Investment Structures

Tax Implications for Investors

International Tax Compliance

Entity Structure Considerations

Anti-Money Laundering (AML) and KYC

Regulatory Considerations by Jurisdiction

💡 International Investment Best Practices

  • Engage experienced international securities counsel in relevant jurisdictions
  • Implement robust KYC and AML procedures for international investors
  • Consider tax-efficient structures for cross-border investments
  • Ensure compliance with FATCA and CRS reporting requirements
  • Review withholding and treaty obligations for foreign payments
  • Monitor regulatory changes in key investor jurisdictions

Post-Investment Management and Ongoing Compliance

Post-investment management and ongoing compliance for subscription agreements

Investor Relations and Communication

Securities Law Compliance

Corporate Governance

Liquidity and Exit Planning

Risk Management and Insurance

Performance Monitoring and Reporting

✅ Post-Investment Success Factors

  • Establish clear investor communication and reporting procedures
  • Maintain ongoing securities law and regulatory compliance
  • Implement strong corporate governance and oversight structures
  • Plan for liquidity events and exit opportunities
  • Monitor performance against business plan and investor expectations
  • Maintain appropriate insurance coverage for business risks

Download Your Subscription Agreement Template

Download professional subscription agreement template

Our comprehensive subscription agreement template includes all the essential provisions you need to properly structure and document private securities offerings. The template is professionally drafted by experienced securities attorneys and can be customized for various offering types and investment structures.

What's Included in Our Template:

💼 Template Features

  • Covers all major subscription agreement provisions and requirements
  • Includes both standard and sophisticated investment structures
  • Professional legal drafting with clear language and comprehensive terms
  • Customizable for various offering types and securities structures
  • Current with latest securities law and regulatory developments
  • Compatible with federal and state private offering exemptions
Download Subscription Agreement Template

⚠️ Important Legal and Securities Disclaimer

This template is provided for informational purposes only and does not constitute legal, investment, or securities advice. Subscription agreements involve complex federal and state securities laws, investor qualification requirements, and regulatory compliance issues that vary by jurisdiction, offering type, and investor characteristics. While our templates are professionally prepared, every securities offering is unique and may require specific legal, regulatory, and compliance provisions. We strongly recommend consulting with qualified securities attorneys, compliance professionals, and investment advisors to ensure your subscription agreement meets your specific needs and complies with all applicable securities laws and regulations.