Advance Subscription Agreements: How ASAs Work, Long-Stop Dates and SEIS Rules
An advance subscription agreement, or ASA, is a contract where an investor pays money into a company now in return for shares the company issues later. The shares are usually issued when the company raises a priced funding round, at that round’s price less a discount, or on a fixed date called the long-stop date if no round has happened by then.
ASAs exist because a young company is hard to value, and the UK’s tax reliefs for early investors only apply to shares. A US-style SAFE, sometimes called a SAFE note, also leaves the valuation until later, but a standard SAFE doesn’t…
The skinny
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