What Is a Subscription Receipt Agreement

A subscription receipt agreement (SRA) is a document that outlines the terms and conditions of a subscription receipt offering, which is a financial instrument used by companies to raise capital. An SRA is a legal agreement between the issuer of the subscription receipt and the purchaser, which sets out the terms of the transaction, including pricing, redemption options, and other key details.

In simple terms, a subscription receipt is a type of security that is issued by a company to investors in exchange for cash. The subscription receipt represents the right to receive future shares or assets of the company. SRAs are used to govern these transactions, and they are commonly used in the mining, oil, and gas industries.

The SRA is an important document for both the company and the investors because it spells out the terms of the investment. This includes the number of subscription receipts that are being offered, the price per subscription receipt, and any conditions that must be met for the investment to be completed.

In addition, the SRA will usually outline the conditions under which the subscription receipts can be redeemed, such as when the company completes a particular milestone or achieves a specific financial goal. This can be beneficial for investors because it gives them some degree of certainty about when they can expect to see a return on their investment.

An important aspect of SRAs is that they are often structured as a “unit offering” along with a share purchase warrant (SPW), which gives the investor the right to purchase additional shares in the company at a future date. The inclusion of an SPW can increase the appeal of an SRA to investors because it provides them with an option to gain additional exposure to the company if they believe it will be successful.

Overall, subscription receipt agreements are an important tool for companies looking to raise capital and for investors looking to invest in them. By clearly outlining the terms and conditions of the investment, SRAs help to ensure that both parties are fully informed and that the investment proceeds smoothly. As such, understanding SRAs is critical for anyone involved in the investment world.

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