What is a Subscription Agreement? | Private Money Minute with Jillian Sidoti
In this Private Money Minute, Jillian Sidoti, Esq., CCIM answers the question, "What is a Subscription Agreement?".
Transcription:
"This week on, The Private Money Minute, we're going to discuss what a subscription agreement it is. And we're going to do that, right now.
When an investor invests in a company, they should receive a whole bunch of documents, and in that package of documents is a document known as the subscription agreement. The subscription agreement is the bow on the gift of the disclosure. What it does is it binds the investor to the company and the company to the investor. At this point in time, through the subscription agreement, the investor is agreeing to invest, in accordance with the terms and conditions of the other documents provided to them. Usually, these other documents are things like the private placement memorandum, and an operating agreement, or bylaws, or some other material contracts.
So in the subscription agreement, an investor says, yes I'm willing to invest, this is how much I'm going to invest, here are all my contacts, I attest that I am indeed an accredited investor, or perhaps a sophisticated investor, or they're not investing more than 10% of their net worth. Most importantly, they're attesting to the fact that they understand the risks associated with investing. I'm Jillian Sidoti, and this has been, The Private Money Minute".