A subscription agreement targets private investors, angel investors, and institutional investors, all called “subscribers.” A subscription agreement details the agreement between a subscriber and the South Carolina business entity in which he or she wants to invest in. The subscription agreement establishes the promise by a company to sell a certain amount of the company’s shares, membership units (or interest), or partnership interest, at a certain price. The agreement also represents the investor’s promise to buy that specific amount of equity established by the agreement.
A subscription agreement is used to cement the details of an agreement to sell equity in a company. These type of agreements are ordinarily used in private companies, start-ups looking to raise capital from investors by selling their ownership or equity in the company, and individuals/entrepreneurs looking to induce investors with the protection of a private placement memorandum and want to include a subscription agreement to put the proposed deal in writing.