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Subscription Agreement for Shares of Stock Fill out the template

Subscription Agreement for Shares of Stock

Last revision
Last revision 10/02/2020
Formats Word and PDF
Size 3 to 4 pages
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Last revision: 10/02/2020

Size: 3 to 4 pages

Available formats: Word and PDF

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Subscription Agreement for Shares of Stock

A Subscription Agreement is a document wherein a person (the "Subscriber") agrees to acquire the unissued shares of an existing corporation or a corporation that will be incorporated (the "Company"). However, some also use Subscription Agreements for acquiring shares that will come from an increase in authorized stock of an existing corporation. In this case, the subscription is called a "deposit for future subscription".

A Subscription Agreement should contain the basic terms and conditions of the acquisition such as the number of shares that will be acquired, the price for the acquisition, and the manner of payment. If the payment will be anything other than cash, then the value shall first be determined by the stockholders or the board of directors of the Company and said value shall be subject to the approval of the Securities and Exchange Commission.

If the subscription is going to be a deposit for future subscription, the SEC provides that all of the following elements must be present:

  • The unissued authorized capital of the Company is not sufficient to cover the amount of shares that the Subscriber will subscribe to under the Subscription Agreement;
  • The Board of Directors has approved the proposed increase in authorized capital stock (for which a deposit was received by the Company);
  • The stockholders have also approved the proposed increase;
  • The application for the proposed increase has been presented for filing or has been filed with the SEC.

How to use this document

A Subscription Agreement is usually drafted by the Company issuing the shares however, it can also be drafted by the Subscriber if the Company does not have a subscription Agreement available. The user should complete the information required in the document. Once the document is completed, the user should print at least three (3) copies of the Subscription Agreement.

Both parties should review the document and, if all the information is correct and agreed upon, both parties should sign all copies of the document.

This document also contains an Acknowledgment. An Acknowledgment is an act of a person before a notary public stating that the signature on a document was voluntarily affixed by him and he executed the document as his free and voluntary act. Acknowledging a document before a notary public turns document into a public document. Public documents are generally self-authenticating, meaning no other evidence will be needed to prove the execution of the document. If the document will be acknowledged, the parties should present themselves before a notary public to swear an oath to the foregoing.

Applicable laws

The Revised Corporation Code is the general law that governs Subscriptions Agreements. Several laws, rules and regulations may also affect the Subscription Agreement such as Financial Reporting Bulletin No. 6 as amended on 11 May 2017 on Deposit for Future Stock Subscription. Other laws, their rules and regulations, and SEC rules may also affect the conduct and transactions of the Corporation such as but not limited to the 1987 Constitution of the Philippines, the Securities Regulation Code, the Foreign Investment Act, the Republic Act 8179, specifically the Foreign Investment Negative List, the Anti-Money Laundering Act, and the Anti-Dummy Law may affect the ownership requirements of a corporation, depending on the business of the corporation. Tax laws may also affect the subscription of shares.

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