Question: What is a share purchase agreement?

A share purchase agreement (“SPA”) is typically entered into by and between a buyer and seller(s) of a target company’s shares whereby the seller(s) agrees to sell a specific number of shares to the buyer for a specified price.

How does a share purchase agreement work?

A share purchase agreement is defined as a legal contract between a seller and a buyer. They may be referred to as the vendor and purchaser in the contract. The specific number of shares are listed in the contract at the stated price. This agreement proves that the sale and the terms of it were agreed upon mutually.

What should a share purchase agreement include?

The core elements of a Share Purchase Agreement include: Shares, Purchase Price, Payment, Closing Deliveries, Closing Date, Representations and Warranties. The Share Purchase Agreement may also contain clauses dealing with Confidentiality, Non-Competition, Non-Solicitation, and Deposit.

Who prepares the share purchase agreement?

The buyer’s lawyers will generally prepare the first draft of the share purchase agreement (SPA).

What happens in a share purchase?

A share purchase requires the purchase of 100 percent of the shares of a company, effectively transferring all of the company’s assets and liabilities to the purchaser. … Generally, the purchaser will prefer an asset transaction and the vendor will prefer a share transaction.

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Why have a share purchase agreement?

A Share Purchase Agreement is a document a shareholder may use to transfer their ownership of company shares (also called stock) to a buyer. … Typically, this means they are entitled to 10% of the company’s profits and 10% of the votes in corporate resolutions.

What is the difference between shareholders agreement and share purchase agreement?

As share purchase agreements just lay down a lawful agreement between the parties about the transfer of shares, Shareholders agreement lays down the rights and other obligations of the parties. It defines the actual relationship of the parties in terms of rights generated by purchasing shares of the company.

Does a share purchase agreement need to be notarized?

The Share Purchase Agreement needs to be signed by both the purchaser and seller of the shares. … It is not necessary to get the agreement notarized.

How do you execute a share purchase agreement?

5 easy steps to file share purchase agreement

  1. Review of the share purchase agreement by both the parties.
  2. Signature by both the parties. …
  3. Copies should be made for a purchaser, seller and the company.
  4. Giving the certificate after the payment.
  5. It can register if you meet certain criteria.