Each offering on the Marketplace has documents related to that deal, which can be found under the Documents section of the offering’s detail page. These documents are there to help you perform your due diligence for a deal. You should carefully review each offering in detail and consult with your legal, tax, and financial advisors before making an investment on the Marketplace.
Each deal on the Marketplace has a Subscription Agreement within its documents. In this article, we’ll cover some frequently asked questions about them.
What is a Subscription Agreement?
A Subscription Agreement is a formal agreement between a company and an investor. They establish the capital contribution as well as terms and conditions around key provisions of the transaction.
What is the purpose of a Subscription Agreement?
Essentially, the Subscription Agreement ensures the suitability of the investor to invest and acts as a legally binding agreement between the investor and the sponsor. It often requires investors to acknowledge that they’ve read the Private Placement Memorandum (PPM) and Operating Agreement for the offering, and that they meet the requirements to invest in the offering. You should carefully review each offering in detail and consult with your legal, tax, and financial advisors before signing the Subscription Agreement and investing.
Are Subscription Agreements standardized?
No. Subscription Agreements vary depending on the sponsor and offering.
What might a Subscription Agreement include?
A subscription can agreement include (but is not limited to):
- Capital commitment
- Investor information needed for suitability determination, as well as regulatory and tax reporting reasons
- Conditions precedent, representations, and warranties
- Confidentiality clause
How is a Subscription Agreement different from a Private Placement Memorandum (PPM)?
The PPM goes into the specifics of the offering, whereas the Subscription Agreement acts as the purchase agreement to acquire interests in the offering.
To learn more about PPMs, refer to this article: Private Placement Memorandum (PPM) overview.
How is a Subscription Agreement different from an Operating Agreement?
The Operating Agreement outlines how the governing body will operate. The Subscription Agreement is the legally binding agreement between the investor and the Issuer.
To learn more about Operating Agreements, refer to this article: Operating Agreement overview.