Subscriber Shares
/səbˈskraɪbə ʃɛəz/
Subscriber shares are the first shares issued to the founding members of a company during incorporation, typically recorded in the memorandum of association.
Subscriber shares are the first shares issued to the founding members of a company during incorporation, typically recorded in the memorandum of association.
Subscriber shares represent the initial ownership stakes in a newly formed company.
These shares are issued to the founding members who sign the memorandum of association.
They form the basic share capital structure from which the company can later issue additional shares.
Subscriber shares are essentially ordinary shares but distinguished by their timing and purpose during incorporation.
Once issued, they carry the same rights as ordinary shares including voting rights and dividend entitlements.
The main difference lies in their role as the foundational shares that establish initial ownership.
Subscriber shares can be held by any eligible person or entity who signs the memorandum of association during incorporation.
This typically includes founders, early investors, or other parties involved in establishing the company.
The subscribers become the initial shareholders upon company formation.
Most companies issue a small number of subscriber shares during incorporation, often just one or two shares per founder.
This minimal issuance keeps initial costs low whilst establishing the basic share structure.
Additional shares can be issued later as the company grows and attracts investment.
Yes, subscriber shares can be transferred like any other shares, subject to the company's articles of association and any shareholder agreements.
However, transfers may be restricted by pre-emption rights or other provisions designed to control ownership changes in early-stage companies.
During funding rounds, subscriber shares typically remain unchanged but may be diluted by new share issuances.
The original subscriber shares maintain their proportional rights, but their percentage ownership decreases as new shares are issued to investors.
Subscriber shares form part of the company's issued share capital and therefore contribute to ownership calculations during valuations.
However, their impact on valuation depends on the total number of shares issued and the company's overall financial position at the time of assessment.
