In Redweaver Investments Ltd v Lawrence Field Ltd (1991) 5 ACSR 438, the NSW Supreme Court held that a provision in a share purchase agreement that required the defendant to pay the applicant a “lump sum compensation” in certain circumstances was essentially an unauthorized reduction in the defendant`s capital. Therefore, the alleged contractual obligation to pay the funds is not applicable. Once the parties have signed the share subscription contract, the investor and the company must follow the investment procedure set out in the document, namely: on the other hand, the shareholders` agreement defines the relationship between the shareholders, sets the conditions for the company`s participation and is not directly related to the investment process itself. The shareholder agreement is a contract signed by the shareholders of a company and usually contains details such as restrictions on the transfer of shares, participation/tag clauses, non-competition clauses, issuance of shares, termination of shareholder agreements and employment issues. Although not necessarily related to the organization of your share subscription contract, a word of caution: shares must be issued for appropriate considerations (which must be defined by the board of directors) in accordance with section 40 (1) (a) of the Act. When advising the board of directors of a company proposing to issue additional shares, be sure to familiarize yourself with the importance of “reasonable consideration” within the meaning of the law. A director of the company may be liable to possible personal liability if such a director does not vote against a decision to allocate and issue shares, knowing that such an allocation and issuance are contrary to the provisions of section 41 of the Act. In addition, a share issue is not a transfer of securities for the purposes of the Securities Transfer Tax (STT). The standard position may be changed and the company`s MOI may require the company`s shareholders to authorize all share issues (such inclusion will likely be covered by section 15(2)(a)(iii) of the Act as a higher standard, greater restriction or heavier requirement). . . .