Advance subscription

Advance subscription: an equity instrument under which an investor pays in advance for shares that will be allocated at a later date. The terms of the equity instrument are outlined in an advance subscription agreement (or ASA), which set outs targets/trigger events following which equity will convert into shares and a longstop date by which investment will automatically convert if such targets are not met. ASAs are commonly used by start-ups who are looking to secure funding in a short period of time and are preferable by investors because, (i) shares issued in accordance with an ASA can be issued at a discount and (ii) may allow investor to benefit from SEIS or EIS tax relief.