A subscription agreement is the contract an investor signs to commit capital to a private fund. It documents the investor's capital commitment amount and contains representations about the investor's identity, qualification status, and suitability.
Why It Matters
The subscription agreement is your fund's primary record of each investor's commitment and qualification. It contains the investor's representations that form the basis of your Regulation D compliance. If an investor later claims they were not qualified, the subscription agreement is the first document your counsel will reach for.
Key Details
- Specifies the investor's capital commitment amount, which becomes binding once the GP accepts the subscription.
- Contains representations that the investor qualifies as an accredited investor (Rule 506(b)/(c)) or qualified purchaser (Section 3(c)(7) funds).
- Collects KYC (Know Your Customer) and AML (Anti-Money Laundering) information required for compliance with the Bank Secrecy Act.
- References side letter terms if applicable, linking any negotiated modifications to the investor's commitment.
- Executed at each closing, so a fund with multiple closings will have subscription agreements signed at different dates.
For a deeper look at subscription agreements and other fund documents, see the Private Fund Documents Guide.
Capital Company handles investor onboarding as part of fund administration, including subscription document processing, KYC/AML verification, and commitment tracking across closings.
This content is for informational purposes only and does not constitute legal, tax, or compliance advice. Consult qualified counsel for guidance specific to your situation.