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You’ve made your pitch, shared information about your company and agreed how many shares the investors will receive for what investment. You may have signed a term sheet or agreed to the key details informally. Now, what legal steps should you take to bring on board investors? 

Step 1: Company Sends Each Investor Legal Documents 

  • share subscription letter or deed: setting out the number of shares, price and other details; 
  • deed of accession: Each investor agrees to be bound by the company’s shareholders agreement and company constitution

Step 2: Investors Sign and Pay

  • investors pay subscription money to the company’s bank account. Alternatively, an investor can pay money into an escrow account where it is held until an agreed date, or the company raises an agreed amount of money. 
  • investors send back signed share subscription letter or deed, and the deed of accession

Step 3: Company Closing Steps

  • company resolutions to approve each new investor, issue shares, send share certificates, update company register and ASIC records;
  • company signs the deeds of accession and share certificate and sends to investors; and
  • company (usually the company’s lawyer or accountant) updates the Company’s Register of Members (Shareholders) and updates the ASIC records

1. Company Resolutions

The company must approve the new investors and share issues via either a unanimous, special or ordinary vote by the Board of directors or the shareholders. The shareholders agreement, company constitution or replaceable rules in the Corporations Act 2001 (Cth)(the Act) will set out the approval requirements.

2. Share Subscription Letter or Deed

The share subscription letter or deed sets out the number of shares that each investor is subscribing for, and the total amount of each investor’s investment.

A share subscription letter is usually a company-friendly document setting out: 

  • the amount of the investment by that investor;
  • the number of shares the investor will receive; and
  • time frames and warranties to confirm they can invest per the Act’s requirements for issuing shares in private companies.

A share subscription deed may include, for example, that the information the company has provided is complete and accurate, that the company warrants that it owns all relevant assets required for the business including intellectual property and that the company has no impending or actual litigation.

3. Deed of Accession to the Shareholders Agreement

The company provides each investor with the current constitution, and shareholders agreement. If the company does not have a shareholders agreement, it can either: 

(i) draft one before the investors join the business. This is preferable for the founders as they control the Agreement. It should set out sufficient rights to protect minority shareholders (i.e. the investors); or

(ii) negotiate the shareholders agreement with the investors. This will generally result in the investors having more power than the first option. For example, investors may require a list of decisions that they can veto.

4. Share Certificate

The company signs the share certificate which sets out who the investor is and what shares they own.

5. Update the Company Members Register and ASIC Records

Founders must update the members’ register which sets out all shareholders and their shareholdings. They must also update the ASIC record within 28 days of issuing the shares.


If you have any questions or need assistance creating the share issuance documents, get in touch with our specialist startup lawyers on 1300 544 755.


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