If you’re raising capital or bringing new investors into your company, chances are you’ve come across Share Subscription Agreements (SSA) and Shareholders’ Agreements (SHA).
And if you’re here, you’re probably wondering what’s the difference between them.
The short answer is an SSA gets the investor into the company, then an SHA defines how everyone works together forever!
For a more detailed answer, keep reading as we break it down.
What’s a Share Subscription Agreement?
A Share Subscription Agreement is the contract used when a company issues new shares to an investor in exchange for equity.
You’ll usually need an SSA in situations like:
- seed or Series A fundraising rounds
- existing shareholders injecting new capital
- starting a joint venture, or
- bringing in a strategic investor or partner
Because of that, SSAs typically include clauses that define:
- how many shares are being issued and their class
- the subscription price and how it will be paid
- when the transaction is expected to complete, and
- conditions to be met before the deal closes (like full board approval)
It’s a one-time agreement focused on the buying and issuing of shares.
Once it’s signed and the funds come in, its job is done.
What’s a Shareholders’ Agreement?
Once the shares are issued, the Shareholders’ Agreement kicks in.
This document governs the relationship between shareholders, like how decisions are made, what if someone sells their shares, and how disputes are handled.
A typical SHA covers things like:
- voting rights and how the board is structured
- dividend policies
- restrictions on transferring shares
- tag-along and drag-along rights
- dispute resolution and exit strategies
It’s especially important when things can get personal fast, like in a joint venture or family business.
Side-by-side: SSA vs SHA
| Share Subscription Agreement (SSA) | Shareholders’ Agreement (SHA) | |
| Purpose | Used when issuing new shares to an investor | Governs relationships among existing shareholders |
| When Used | During fundraising or capital injection | After the investment, or at the same time as the SSA |
| Focus | One-off transaction: shares + money | Ongoing rights, duties, and governance |
| Binding Effect | Binding upon signing | Binding upon signing |
| Scope | Doesn’t cover internal governance | Covers voting, board seats, share transfers, exits, etc. |
Do you really need both?
In practice, and in our professional opinion, think of the SSA as the front door and the SHA as the house rules: The former gets investors in while the latter keeps things running smoothly.
While neither are legally mandatory, skipping either leaves a business open to misunderstandings and disputes between shareholders.
If you’re raising funds and currently lack a formal shareholder structure, get both agreements drafted right, ideally by professionals who’ve seen what can go wrong.
Venice Goh is a Pupil-in-Chambers at Edwin Lee & Partners. She was called to the Bar of England and Wales by the Honourable Society of Middle Temple in 2022. Venice holds a Bachelor of Laws (LLB) with First Class Honours from the University of Liverpool, where she was recognised for outstanding academic excellence. She later pursued the Bar Training Professional Course at City, University of London, specialising in Corporate Law and Practice, followed by the Legal Practice Course at BPP University, where she graduated with Distinction under a merit-based scholarship.
