What is a Deed of Accession?

A Deed of Accession is a document by which a person/entity becomes a party to an existing Shareholder’s Agreement.


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What is a Deed of Accession?

A Deed of Accession is a document by which a person/entity becomes a party to an existing Shareholder’s Agreement.

A Deed of Accession is used when a person/entity becomes a shareholder of a company (by subscribing to new shares or by acquiring existing shares) where a Shareholder’s Agreement is already in place.

By executing a Deed of Accession, the new shareholder becomes a party to the Existing Shareholder’s Agreement and is bound by all the terms of that agreement.

What is the purpose of the Deed of Accession?

A Deed of Accession is a document that allows a new person to become a shareholder of any company. It implies that the new shareholder agrees to all the terms and conditions mentioned in the existing Shareholders Agreement. One of the main benefits of this document is, it can save a lot of time and money for the company because there is no need to re-draft the Shareholders Agreement each time whenever a new investor joins the company and wants to become a shareholder.

What is a Shareholders Agreement?

A Shareholders’ Agreement, also known as a Founders’ Agreement, is a contract among founders of a company to regulate their rights as shareholders of the company. It consists of various terms that regulate the rights and duties of the shareholders towards the company.

You can also check our Shareholders Agreement document here

Who signs a Deed of Accession?

Any person who is interested in investing in a company and wants to become a shareholder needs to sign a Deed of Accession. It binds the new investor to the terms and conditions of the existing Shareholders’ agreement of that company.

What does a Deed of Accession Contain?

It is a simple document that is used whenever a new investor wants to invest in a business and become a shareholder. It is a short form of a Shareholders Agreement which is easy to draft and has fewer legal formalities. The important thing to include in a Deed of Accession is that new investors consent to agree on the terms and conditions mentioned in the existing shareholder’s agreement.

Is there a standard form of a deed of accession?

A deed of accession is a fairly simple document and the only difference is in the way it’s prepared. At times there is only one person signing it and so it is written as a deed poll. Other times, they require other shareholders to sign in too. The exact format of it will depend on the structure of a company’s existing shareholders’ agreement.

Conclusion

A Deed of Accession is an important document used before inviting any new investor to become a shareholder of a company. It is relatively simple and has very few formalities which can save a lot of time and money for any organization. It also acts as a legal binding for the new investor by complying with the obligations mentioned in the existing shareholder’s agreement.

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