EIS Shareholder and Subscription Agreement

Enterprise Investment Scheme Subscription Agreement

CO.EIS.03

EIS shares must be subscribed for, meaning they must be newly issued shares and not shares sold by an existing shareholder. The subscription for shares under the Enterprise Investment Scheme will require a degree of formality and it is therefore usual for the parties to enter into a subscription and shareholders agreement.  

This Subscription Agreement is made between (1) the Founder(s), (2) the Investor(s) and (3) the Company. It sets out the terms on which the investor(s) will subscribe for shares in the company and how the business will be run following the subscription. It is likely that the investor(s) will want covenants from the founders specifically in relation to the company being run in a way that does not jeopardise their EIS relief and warranties as to the business that is being invested in.

It is strongly recommended that independent legal and tax advice is sought for companies or investors considering EIS investment.

HMRC will require sight of the subscription or shareholders agreement (if there is one) when the company completes its EIS1 compliance statement.

The agreement has the following clauses:

  • Definitions & Interpretation
  • Subscription
  • Rights, Obligations & Restrictions of the Investors
  • Investor Director
  • Warranties
  • Operating Commitments
  • Reserved Matters
  • Transfers
  • Other Matters
  • Conflict with Articles
  • Duration
  • Notices & Service
  • Confidentiality
  • No Partnership or Agency
  • No Waiver
  • Severance
  • Entire Agreement
  • Non-Assignment
  • Further Assurance
  • Costs
  • Counterparts
  • Applicable Law & Jurisdiction
  • Schedule 1 – Details of Founders, Investors & Capitalisation of Company Post Subscription
  • Schedule 2 - Warranties
  • Schedule 3 - Other Matters
  • Schedule 4 - [Articles of Association]

The document is in open format. Fields should be completed. Wording in square brackets is optional and can be deleted or retained according to requirements.

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