Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
Preview Page
CHAPTER 26
SUBSCRIPTION AGREEMENTS
Section
§ 26.01 Statutory Summary and Purpose of Subscription Agreements
§ 26.02 Legal Effect
§ 26.03 Illegal Subscriptions
§ 26.04 Transfer of Subscriptions
§ 26.05 Agency Law Issues on Subscriptions
§ 26.06 Contents Required
§ 26.07 Corporate Control and Minority Rights
§ 26.08 Financial Reporting of Subscription Agreements
§ 26.01 Statutory Summary and Purpose of Subscription
Agreements
An individual seeking to start a corporation will usually need to find a
source of capital. One particular source is the subscription agreement. A
subscription agreement is a promise to purchase a certain amount of
shares in a corporation which may or may not currently exist. The
subscription agreement serves two primary purposes. First, the individual
or individuals starting the corporation will have a certain source of
funding. Second, the promising individual (subscriber) will not have to
risk actually giving money to the corporation until it is formed or certain
requirements are met. If the promoter is unable to come up with
sufficient sources of funds and never forms the corporation, the
subscriber has avoided risk by not paying out up front.
The subscription agreement can also serve as a way for subscribers to
control the manner in which they fund the new corporation. For example
they can stipulate levels of funding before their subscription becomes
binding or even set a timeline for the number of new shares they will buy
at what time and in what increments.
§ 26.02 Legal Effect
A subscription for shares is not enforceable against the subscriber
unless it is memorialized in a written agreement signed by the
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
