������Ƶ

A Subscription letter is a formal document investors use to show their commitment to buy shares or securities in a Nigerian company. It outlines key details like the number of shares they want to purchase, the price per share, and their payment terms. Think of it as a binding promise to invest in the business.

Under Nigerian securities law, these letters play a crucial role in private placements and initial public offerings (IPOs). They help companies verify investor interest, comply with Securities and Exchange Commission requirements, and create legally enforceable agreements between the company and its potential shareholders. The letter must include investor details, investment amount, and specific acknowledgments about understanding the risks involved.

Use a Subscription letter when raising capital through private placements or IPOs in Nigeria. This document becomes essential during funding rounds, especially when companies need to formally document investor commitments and maintain SEC compliance. It provides a clear record of who's investing, how much they're investing, and under what terms.

The timing is critical - companies must secure these letters before accepting investment funds and issuing shares. Nigerian businesses typically need them when expanding operations, launching new projects, or restructuring ownership. They're particularly important for startups seeking venture capital and established companies planning to go public, as they help prevent future disputes about investment terms.

• Basic Private Placement: The standard version used for direct investment in private companies, covering investment amount, share price, and basic warranties
• IPO Subscription: More detailed version for public offerings, including additional disclosures and regulatory compliance statements required by Nigerian SEC
• Convertible Note: Modified format specifically for startup investments where shares will convert at a future date, including conversion terms and triggers
• Corporate Investment: Enhanced version for institutional investors, with more extensive representations and warranties about company status

• Company Directors: Approve and oversee the subscription process, ensuring terms align with corporate strategy and Nigerian business laws
• Potential Investors: Sign the Subscription letter, committing to purchase shares under specified terms and conditions
• Corporate Lawyers: Draft and review letters to ensure compliance with SEC regulations and protect both parties' interests
• Company Secretary: Manages documentation, maintains investor records, and facilitates share issuance
• Investment Bankers: Often coordinate the subscription process during IPOs or large private placements

• Company Details: Gather current share structure, valuation, and registration documents from CAC
• Investment Terms: Define share price, number of shares, and total investment amount clearly
• Investor Information: Collect full legal name, contact details, and proof of identity/incorporation
• Payment Terms: Specify payment method, deadline, and bank account details for share purchase
• Legal Requirements: Include SEC-mandated risk disclosures and investment declarations
• Approval Process: Document board resolution authorizing share issuance and terms

• Offer Details: Clear statement of share quantity, price per share, and total investment amount
• Investor Declaration: Confirmation of investment understanding and acceptance of company terms
• Company Information: Legal name, registration number, registered address, and share capital structure
• Payment Terms: Detailed payment instructions, timeline, and conditions for share allocation
• Risk Disclosures: Standard SEC-required warnings about investment risks
• Governing Law: Explicit statement that Nigerian law governs the agreement
• Execution Block: Designated spaces for investor signature, witness, and company representative

A Subscription letter differs significantly from an Acceptance Letter in both purpose and legal effect within Nigerian business practice. While both documents formalize agreements, they serve distinct functions in investment and business transactions.

• Primary Purpose: Subscription letters specifically commit to purchasing shares or securities, while Acceptance letters broadly confirm agreement to various business proposals or terms
• Legal Framework: Subscription letters must comply with SEC regulations and Companies Act requirements for share issuance; Acceptance letters follow general contract law principles
• Required Content: Subscription letters need detailed investment terms, share quantities, and risk disclosures; Acceptance letters typically contain simpler terms of agreement
• Timing and Effect: Subscription letters initiate the investment process and create binding commitments, while Acceptance letters usually conclude existing negotiations