Share of investors in same company with two different names

726 votes

Hi,
Thank you for your query. it is my opinion that for the sake of clearing ambiguity, if suitable both the companies should merge and function as a single entity. The share subscription agreement has to be drafted in a way that it gives enough scope for the equitable distribution of shares. Investors will not appreciate a vague document as the dividends they will receive from their investments will vary on the basis of the profits of two different companies. A substantive opinion can only be given subsequent to the perusal of the papers related to the company.

Advocate Ranit Basu LawRato

816 votes

Funding is to be done in one organization but shares are to be issued for the investment from both companies, this is what you meant? If so, first swap shares between the two companies (Both Companies will have shares in each other so issue of shares from one organization shall indirectly give rights in the other company) and sell to the extent of funding and then issue additional shares in favour of investor. The issue needs more clarity to give you appropriate reply. You need to create a shareholding agreement or business acquisition agreement depending upon the financial and legal due diligence conducted by Investor against investee company.

Advocate Rajesh Singh LawRato

998 votes

Hi,
There are two options;
option 1:
The 2 companies can enter into a joint venture agreement for the completion and sales of new technology product and the investor company can enter into a finance agreement with the Joint Venture of the 2 company's.
Option 2:
You can merge the two companies and the merged company can issue shares or debentures to the investor company.

Advocate Rushil Aiya LawRato