Share subscrription agreement and share holder's agreement

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amit (Querist)
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21 February 2011 Dear Sir/Madam,
I want to know what is share subscription agreement and share holder's agreement ? Purpose of such agreements are drafted ? Is there difference between both the agreements ?

Jayashree S Iyer

Jayashree S Iyer (Expert)
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22 February 2011 Share Subscription Agreement is entered into by the Company with select persons who agree to subscribe to the shares of the company. This agreement sets out the terms of share subscription viz., price of the share, date of subscription, whether preference or equity shares, payment terms, etc. Here the agreement is not with the shareholders but with the future shareholders.

Shareholders agreement is an agreement entered with the shareholders of the company detailing their rights, liabilities, etc. It will prescribe the lock in period, voting rights, conditions with regard to transfer of shares, etc/

Purpose of these agreements is to have a firm commitment with regard to share subscription and to have clear terms of agreement with the shareholders / future shareholders.

parthasarthy naidu

parthasarthy naidu (Expert)
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22 February 2011 Share Subscription Agreement is an agreement to subscribe to the shares of the company. This agreement sets out the terms of share subscription namely price of the share, period by which the subscription is to be brought in etc.The purpose of this agreement is to have a firm commitment from the subscribers.

Shareholders agreement is an agreement entered with the shareholders of the company detailing their rights, liabilities, etc. It will prescribe the lock in period, voting rights, conditions with regard to transfer of shares, etc. The purpose of this agreement is to have a firm commitment from the shareholders. Such agreements are entered into in case of take over of management or disinvestment of holdings by the present promoter shareholders of the company.

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