What is an Advance Subscription Agreement?

Advance Subscription Agreements (ASAs) are mechanisms that enable investment for equity. Investors pay for shares which are allocated to them at a later date, usually at a discount to the price per share at the next round of funding. The shares are usually issued upon a funding round that meets any criteria specified in the agreement (a Qualifying Funding Round).

This ASA includes key provisions to ensure it complies with SEIS/EIS eligibility requirements, such as a longstop date of no more than 6 months from the date of the agreement. This means that if the Qualifying Funding Round has not occurred within 6 months, the money will automatically convert on this date. The number of shares received will be determined by the price per share at the date of conversion, rather than a predetermined number.

Other ASA provisions included for SEIS/EIS eligibility are the prohibition of refunds for the subscription; the fact the subscription cannot be varied, cancelled or assigned; and that the subscription does not charge interest. Using this ASA should not impact your company’s SEIS/EIS eligibility.