Advance Subscription Agreement Template for Nigeria

The Advance Subscription Agreement is commonly used in Nigeria's growing startup ecosystem as a bridge financing instrument. It allows companies to receive immediate funding while deferring valuation discussions until a later date, typically a priced equity round. This type of agreement is particularly valuable for early-stage companies seeking quick access to capital without the complexity and cost of a full equity round. Under Nigerian law, particularly CAMA 2020 and SEC regulations, the agreement must comply with specific requirements regarding share issuance and foreign investment provisions. The document typically includes detailed terms about conversion mechanics, investor rights, company obligations, and protections for both parties. It serves as a crucial tool for Nigerian companies in their early funding stages, offering flexibility while ensuring compliance with local regulatory requirements.

1. Parties: Identification of the company and the investor(s)

2. Background: Context of the agreement and brief description of the company's business

3. Definitions: Key terms used throughout the agreement

4. Subscription: Details of the advance subscription amount and corresponding future shares

5. Qualifying Event: Definition and terms of the qualifying event triggering share issuance

6. Conversion Mechanics: Process and calculations for converting the advance subscription into shares

7. Company Representations and Warranties: Standard company warranties about its legal status, capacity, and business

8. Investor Representations and Warranties: Confirmations from the investor regarding capacity and investment understanding

9. Covenants: Ongoing obligations of the company until conversion

10. Information Rights: Investor's rights to receive company information pre-conversion

11. Termination: Circumstances under which the agreement can be terminated

12. Governing Law and Jurisdiction: Nigerian law as governing law and jurisdiction provisions

13. Notices: Process for formal communications between parties

14. General Provisions: Standard boilerplate clauses including assignment, amendments, and severability