A subscription contract exists between a company and a private investor to sell a certain number of shares at a specified price, which documents its adequacy. Read 8 min If you are a private investor in a business, you are known as a subscriber. A subscription contract is a promise of the company to sell a number of shares to an investor at a specified price and an agreement from the investor to pay that price. If you own a company and have promised to sell a certain amount of shares to an investor at a certain price, you should nail the details with a subscription contract. In addition to the sales contract function, a subscription contract can also help the company qualify potential subscribers. SEC rules state that only companies and individuals considered accredited investors have the right to acquire shares from a private company. If the company violates this regime, it loses its exemption for private companies and must register with the SEC. Regulation D of the Federal Regulation Code defines companies, organizations and individuals considered accredited investors with whom a private company can enter into a subscription contract. What if you decide to invest in another way? Here are some pros and cons to invest, but not with subscription agreements. Once the parties have signed the subscription contract, the investor and the company must follow the investment procedure described in the document, namely: as a legal document, it is important to have a legal expert specialized in finance to help you. A lawyer can tell you all the legal terms used in the contract and make sure you agree with what is there. A share subscription contract defines the operation of the investment and specifies that, in broad terms, a partnership is a commercial agreement between two or more people, all of whom have personal ownership of the company.
The partnership company does not pay taxes. Instead, profits and losses are paid to each partner. Partners pay taxes on their share of the partnership`s taxable income distribution, based on a partnership agreement. Law firms and audit firms are often formed as general partnerships.