Subscription Agreement
(Short Form, Private Placement of LLC Interests) (Pro-company)

Summary

This short-form subscription agreement template may be used in connection with a private placement in which limited liability company (LLC) membership interests are sold to an investor. The agreement contains representations from the investor regarding the investor's status as an "accredited investor" under federal securities law and other matters. This template includes practical guidance and drafting notes. This is a short-form, company-friendly agreement that includes representations only from the investor. With respect to the company and the terms of the offering, the investor relies on the information in the company's offering memorandum and on the anti-fraud provisions of the federal and state securities laws. Unlike a long-form subscription agreement, this template does not contain details on settlement mechanics, closing, indemnification, or other clauses, which may be provided in the offering memorandum or an instruction sheet accompanying this agreement or in the LLC's operating agreement. This template does, however, contain an investor questionnaire to assist in determining the investor's eligibility to participate in the offering. This template is not state-specific, so you should consult the LLC statute and state securities laws of the state in which the LLC was formed and revise this template as necessary to reflect the requirements of local law. You should also ensure that defined terms used in this agreement that are also defined in the company's operating agreement have identical meanings. This template assumes a private placement conducted in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended (Securities Act), provided by Section 4(a)(2) of the Securities Act (15 U.S.C. § 77d(a)(2)) or one of the safe harbors thereunder provided by Rule 506 of Regulation D. For more information on the requirements of these exemptions and safe harbors, see Unregistered Offerings and Regulation D Offerings. Note: On March 12, 2025, the Securities and Exchange Commission (SEC) issued a no-action letter providing new guidance on verifying accredited investor status under Rule 506(c) of Regulation D. This guidance significantly eases the verification burden for issuers conducting private securities offerings using general advertising and solicitation. Issuers can now rely on investor self-certification for accredited investor status when certain minimum investment thresholds are met. The SEC also released new Questions 256.35 and 256.36 of the Securities Act Rules Compliance and Disclosure Interpretations providing further guidance on investor verification. For more information, see No Action Letter: Latham & Watkins (March 12, 2025) – Re: Request for Rule 506(c) Interpretative Guidance (Incoming letter dated March 6, 2025). For more resources on private placements generally, see Private Placements Resource Kit, and for a full listing of related private equity content, see Private Equity Transactions Resource Kit. For a full listing of key content covering Regulation D offerings, see Regulation D Resource Kit. To compare state laws on LLC formation, see the Limited Liability Company: Formation and Qualification topic in the Business Entities section of the State Law Comparison Tool.