Two years before the date of his investment or three years after the date of his investment, the investor may have no connection with the company in which he invests. The «link» is not defined in this context, but is considered as a person with the right to acquire more than 30% of the share capital of the company. What should a subscription agreement contain? In addition, the existence of ongoing advanced underwriting agreements may discourage future investors in subsequent funding rounds, as ASA holders receive shares at a discount and thus a higher percentage of equity for pre-paid funds than new investors. Tags: Pre-contract, SEIS/EIS compliance This legal field is relatively new and is developing and evolving. In our experience, it is important for investors and companies to obtain specialized investment legal advice through ASAS and SEIS/EIS. NB (especially for investors), while we see that pre-subscription contracts are becoming more and more popular, we often find that the startup can never actually issue the shares subject to subscription funds already paid. In one recent case, a startup was liquidated, but since the shares were never issued and no EIS 1 declaration of compliance was filed, investors were not even able to claim EIS loss relief – prompting one investor to call these fundraising mechanisms «opaque deception»! To stage the scene, we wanted to quickly address some of the things to consider in the decision between a structured cycle of convertible bonds (using a convertible loan), a convertible share round (with ASA, a simple agreement for the future capital cycle (SAFE) and a share price cycle (using a term sheet, a letter of subscription or agreement). For example, amended articles of association, etc.). Other elements to be agreed that protect the interests of both parties are Long Stop Date and Long Stop Price. In the event that the company fails to increase a qualifying cycle by the long-term date – which should not exceed 6 months from the date of the agreement – the shares will continue to be issued at the long-stop price. * Please note that this article has been reviewed in accordance with the new RMC Guidelines for Pre-Subscription Agreements of December 30, 2019. As a reference, you will find the guidelines eis here and the SEIS guidelines here The formalization of a stake in the capital can take a long time and involves the effective definition of a valuation for the company. With the availability of the Seed Enterprise Investment Scheme («SEIS») and the Corporate Investment Scheme («EIS») for tax breaks for start-ups, startups are raising more private capital than ever before and pre-subscription agreements are becoming increasingly popular as a quick and easy way to raise funds without necessarily agreeing on an assessment with investors.

The new guide confirms RMC`s long-standing positions on a number of technical aspects. For example, the SAA should not be used as an investment tool offering benefits other than investor protection. The new guidelines also state that HMRC does not consider ASAS to be suitable for SEIS and/or EIS unless the agreement: seed and start-up companies often need funds early in their life cycle to launch a concept to develop their business offering or start trading. . . .