What Are Subscription Shares?

It is common for start-ups and established companies to regularly raise funds from investors for growth and expansion. One of these mechanisms is the issuance of new shares. The issuance of shares may refer to either ordinary or preference shares depending on the class of shares the company wishes to offer to the investors. This concept is commonly referred to as raising capital through issuance of shares/equity in the company or subscription shares.

On 14 December 2020, AirAsia X Bhd announced the issuance of shares to new investors under a special purpose vehicle (SPV) to raise capital in the company where the incorporated SPV sought a minimum subscription of RM50 million. This is a common way for a public listed company to attract more investors and attain more funding by issuing shares to the public. This article will give a detailed explanation on the concept and features of subscription shares and will focus on private limited companies.