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Share Subscription Agreement South Africa

Unless this agreement is excluded and the agreement is not subject to a staff share program, a specific decision of the company`s shareholders is necessary to authorize the financial assistance related to the issuance of shares. In addition, a share issue is not a transfer of securities for the purposes of the Securities Transfer Tax (STT). This agreement offers the subscriber the same protection as if the entire company were purchased directly. You have the advantage of 131 guarantees (minus what you want to change). The reduction in the balance you will have due is calculated on the basis of a simple and flexible formula. The second is that they can improve the subscriber`s position. As it is common for subscribers to demand guarantees, shareholders often give them without being sure that the situation is also justified. New subscribers can benefit by demanding more guarantees than they need and later demanding compensation for those who turn out to be fake. Sometimes you might want to change the relative ownership shares at the same time as the sale by subscribing to the newly issued shares. For example, you can buy the shares of an outgoing shareholder and then invest additional equity to get a majority stake. In this case, you need a share purchase and subscription contract. In addition, the company may also have entered into agreements that impose negative obligations on the company limiting the issuance of additional shares (e.g.

B the approval of a lender may be required to increase the issued share capital of the company). It follows that you must first examine the MOI of the company that will issue the shares before you start drafting your share subscription contract. The shareholders` agreement may also include subscription rights or other conditions that may affect the issue of shares. In principle, shareholders` subscription rights are subscription rights that bind the shareholders of the company and refer to the transfer of existing issued shares. I`m sure you`ve been involved in a situation where the boss calls you and orders you to make a share issue by converting part of his credit account in exchange for the shares. In addition, it informs you that the validity date of the subscription must be somewhere last month. This instruction certainly puts you in a difficult situation. However, if you don`t discuss the possible pitfalls of stock buying, you may find yourself in an even worse situation. . . .