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by Undo Capital
December 15, 2025
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What Is a Subscription Agreement?

A subscription agreement is the contract between a company and an investor that sets out the terms under which new shares are purchased in a funding round.

Subscription Agreement Meaning

The subscription agreement's meaning centres on formalising the legal and financial terms of an investment. To define subscription agreement in practice, it covers the number and class of shares being issued, the price per share, warranties, investor rights, completion mechanics and any conditions precedent. A clear subscription agreement definition is essential because it binds both parties and ensures the share allotment is carried out correctly. It often sits alongside the shareholders’ agreement, forming the core legal documentation of a funding round. The subscription agreement stands for clarity, enforceability and protection for both founders and investors.

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Disclosure Notice: This communication is issued by Undo Capital Limited (“Undo Capital”) and is provided strictly for informational purposes only. It contains general information and should not be relied upon as accounting, business, financial, investment, legal, tax, or other professional advice. Undo Capital is not regulated by the Financial Conduct Authority (FCA) and does not provide investment, financial, or tax advice. Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. Nothing in this communication constitutes, or should be construed as, a recommendation, offer, or solicitation to purchase or sell any security or financial instrument.
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Disclaimer: Our services are designed to assist startups and businesses with company formation, legal agreements, and funding-related documentation. We do not provide investment advice, financial advice, or tax advice, nor are we regulated by the Financial Conduct Authority (FCA). Participating in startups and early-stage enterprises carries inherent risks, including limited liquidity, absence of dividends, potential loss of investment, and dilution. Any decisions regarding investments should be made independently by the investor as part of a well-diversified portfolio.