Subscription is the issue of **new** shares by the company; the money goes to the company. A share purchase is the sale of **existing** shares; the money goes to the seller. They are different documents with different warranty positions and different tax and stamp duty consequences — a subscription attracts no stamp duty, a transfer does.
Share Subscription Agreement
Issue of new shares to an investor
Subscription is the issue of new shares by the company; the money goes to the company. A share purchase is the sale of existing shares; the money goes to the seller. They are different documents with different warranty positions and different tax and stamp duty consequences — a subscription attracts no stamp duty, a transfer does.
| Item | Detail |
|---|---|
| Company | [COMPANY NAME], UEN [UEN] |
| Investor | [NAME] |
| Founders (as warrantors) | [NAMES] |
| Subscription amount | S$ [AMOUNT] |
| Shares subscribed | [NUMBER] [Series A Preference Shares] |
| Price per share | S$ [AMOUNT] |
| Resulting stake | [PERCENTAGE] fully diluted |
| Completion date | [DATE] |
| Warranty cap | [The subscription amount / S$ ______] |
| Warranty claim period | [18] months — [7] years for tax and title |
| Stamp duty on subscription | Not applicable — no transfer of existing shares |
| Governing law | Singapore |
1. Subscription
1.1The Investor shall subscribe for and the Company shall allot and issue [NUMBER] [Series A Preference Shares] at S$ [AMOUNT] per share, for a total of S$ [AMOUNT].
1.2The Shares shall rank with the rights set out in the amended Constitution, and shall rank equally with existing shares of that class.
1.3The Shares are issued free from encumbrances and with all rights attaching from the date of allotment.
2. Conditions to Completion
2.1Completion is conditional on each of the following, in form satisfactory to the Investor:
(a)the amended Constitution creating the rights attaching to the Shares having been adopted by special resolution and filed;
(b)the Shareholders’ Agreement executed by all parties;
(c)board and shareholder resolutions approving the allotment, the constitutional amendment, and any board appointment;
(d)pre-emption rights on new issues having been complied with or validly waived in writing;
(e)founder service agreements and vesting documents executed;
(f)assignment of any founder intellectual property to the Company;
(g)the disclosure letter delivered and accepted;
(h)completion of due diligence to the Investor’s satisfaction;
(j)[any regulatory or third party consent required].
6 more pages in the Word file
This is page 1 of the Word document, exactly as it appears when you open it. Fields shown like THIS are placeholders for you to complete.
These notes accompany the template and explain the drafting choices, the compliance points and the mistakes most often made with this document. They appear as a final page in the Word file, intended to be deleted before the document is executed.
A subscription issues new shares and the money goes to the company; a purchase transfers existing shares and the money goes to the seller. The warranty positions differ, and so do the tax consequences — no stamp duty arises on a subscription, whereas a transfer of existing shares does attract duty. Using the wrong document creates real problems.
The warranties are given subject to what is fairly disclosed. A disclosure letter that lists document titles, or attaches a data room index, does not fairly disclose anything — it must give enough detail to let the investor assess the issue. Founders benefit from disclosing generously; investors benefit from insisting on specificity.
Joint and several liability means one founder can be pursued for the entire warranty claim and left to chase the others for contribution. Several liability, each capped at what that founder actually received, is the position to insist on. This is among the most important negotiating points for founders in the whole document.
A cap at the subscription amount is common for the company. Founders giving personal warranties should push for a materially lower personal cap — they have not received the investment, and personal exposure at the full round size is disproportionate.
General warranties expiring in twelve months may lapse before the first audited accounts reveal a problem. Eighteen to twenty-four months is more realistic. Tax and title warranties run longer because the exposure surfaces later.
Warranty 9 covers assignment of founder and contractor intellectual property. Code written by a founder before incorporation, or by a contractor without an assignment clause, belongs to them personally. This is the single most common defect found in early-stage diligence and it can be genuinely serious.
Warranty 10 exists because copyleft licences can require disclosure of the company’s own source code. An investor buying into a software business needs to know what is in the stack, and founders frequently do not know either until asked.
Written key employment terms within fourteen days, itemised payslips, CPF paid on time, no CPF for pass holders, valid work passes and levies paid. These are the compliance gaps most commonly found in growing Singapore companies, and warranties 13 to 15 surface them before completion rather than after.
Condition 2.1(d) requires pre-emption on new issues to have been complied with or waived in writing. An allotment made in breach of existing shareholders’ pre-emption rights is a defect that follows the company into every subsequent round.
Preference rights must exist in the constitution before the shares are issued. Issuing Series A Preference Shares where the constitution recognises only ordinary shares creates an inconsistency that is awkward and expensive to fix later. Condition 2.1(a) sequences it correctly.
The completion checklist puts this at step 4 for a reason. Because the register of members maintained by the Registrar is prima facie evidence of title for a private company, an allotment not filed leaves the investor off the register that determines ownership.
An investor crossing the significant-interest threshold becomes a registrable controller, with an entry and a central filing obligation. Steps 7 and 8 make it part of completion rather than something remembered months later.
Clause 6.1 prevents the investment being applied to repay founder or shareholder loans. Investors care about this; founders who have funded the company personally should raise any intended repayment openly during negotiation rather than after closing.
Paying the investor’s legal costs is normal. It should be capped, and payable only on completion — an uncapped undertaking payable regardless of outcome means a collapsed round still costs the company real money.
Reflects Singapore law and practice current as of {{DATE OF USE}}. VIMA publishes a model subscription agreement, market terms move, and requirements under the Companies Act 1967 including allotment filings, controller registers and stamp duty change — take legal advice before signing, and have the disclosure letter prepared carefully.
This is a ready-to-use template provided for convenience. Laws and requirements change, and every situation is different — please have it reviewed by a qualified professional (a lawyer, corporate secretary, or accountant as relevant) before you rely on it.