Share Purchase Agreement O Que E
A share purchase agreement itself is a private document and there is no need to file it with Companies House. However, you must inform Companies House of the change in ownership in the target company`s next annual report. The agreement consists of five main parts: (1) description of the transaction; (2) the contractual conditions; (3) representations and warranties; (4) Limitations of Liability; (5) Terms. If it is not a sale of assets, but a sale of shares and shares, a section is included that defines exactly what is being sold (for example. B all shares or only a certain number of shares). If several companies and shares of companies are involved, it will be specified in detail what is in the context of the transaction. As a rule, the seller drafts the first share purchase agreement. You upload the draft to the virtual data room towards the end of the second round. This follows several back and forth between lawyers for both sides. If a corporation consists of several shareholders, there is usually a shareholders` agreement. These agreements set out the rights and obligations of shareholders. In most cases, they contain certain rights related to the resignation of a shareholder.
If this is the case, lawyers must take these rights into account in the share purchase agreement of the transaction. A share purchase agreement contains information about the company for which the shares are transferred, the seller and buyer of shares, which law covers the agreement, the type of shares sold and how many shares are sold at what price. This agreement also includes payment details, including whether a deposit is required, when full payment is due, and the closing date of the contract The terms of the purchase contract include, among other things, non-compete obligations. These clauses serve to prevent the seller from starting a parallel business and keeping you away from customers. It serves to protect the goodwill of the company. The expected final phase of a M&A process is called a purchase agreement or SPA. After the entire due diligence process and once a buyer has analyzed the true state of the business for sale, it is finally time to establish the agreement and the selling price of the business. Thus, it is the document that is formalized in an authentic deed and finally presented to a notary, including all the conditions of sale. The first important area indicated in the document is the price and its corresponding conditions: payment methods, forecast or not of deferred payments, variable payments based on the achievement of objectives, currency of payment and circumstances that lead to price adjustments (since the final price is based on the balance at the closing date of the agreement). The contract also includes information if the excess cash is part of the transaction or will be taken by the seller as a dividend, although this is not necessary for that particular transaction. The right of first refusal describes a shareholder`s obligation to first offer his share to one of the existing shareholders before selling it to a third party. This allows the existing shareholder to buy on the same (financial) terms that the external buyer offers.
SPAs also contain detailed information about the buyer and seller. The agreement records all deposits made in the run-up to the negotiations and notes parts of the agreement that have already been completed. The agreement also specifies when the final sale is to take place. The share purchase agreement is a contract that sets out all the terms and conditions relating to the sale and purchase of the Company`s shares. This is not the same as an asset purchase agreement where assets are bought and sold instead of shares. The following elements are listed in a share purchase agreement: The acquisition of shares represents the acquisition of the operational activity of a company. None of the existing contracts with the company will change. When a shareholder sells his shares in a company, he obtains a complete break in the relationship between him and the target company.
However, the buyer will insist on certain contractual commitments concerning the company (guarantees) that will continue to bind the shareholder after the sale. A high degree of detail and care is required in the design of the purchase contract. a single paragraph in the contract can tell the difference between a successful agreement and a failed agreement. The ideal scenario at this stage is an experienced consultant who has a proven track record in successfully drafting business sales contracts. Details of any compensation provided by the buyer or seller are also listed, which covers any costs that may arise after the transaction due to conditions that existed prior to the closing of the transaction. The special tax treatment to which the buyer or seller may be entitled is also listed in the contract. Prior to the conclusion of the agreement, a letter of intent will be prepared to explain the proposed sale. A buyer must exercise due diligence and ensure that the purchase agreement and the letter of intent have the same terms. The seller should specifically review the Sale and Purchase section and the Warranties and Representations section.
The sales and purchasing section should have exactly the same conditions as the letter of intent. If differences are identified, this is likely due to the buyer`s due diligence and must be negotiated before the share purchase agreement is finalized. Some buyers may only be interested in acquiring exclusive ownership of a business. If the target is composed of several shareholders, some may not want to sell their shares. In this case, the trail line can be useful. It allows majority shareholders to force – or “pull” – the minority shareholder to also sell their shares. However, this sale must be carried out under the same (financial) conditions as those offered to the majority shareholder. After the closing of the shares, the seller of the shares is not responsible for the debts of the company, which are the responsibility of the new owners.
Indeed, a company has a legal personality distinct from its directors and shareholders. In comparison, if there is a sale of assets, with a few exceptions (p.B employees), the seller retains all current liabilities of the business, unless he can negotiate with the buyer to take them back with the business. SPAs are used by large publicly traded companies in their supply chains. An SPA can be used when a large number of materials come from a supplier or in the case of a large individual purchase. For example, 1,000 widgets, all delivered at the same time. Before a transaction can take place, the buyer and seller negotiate the price of the item for sale and the terms of the transaction. The SPA is a framework for the negotiation process. The SPA is often used in a large purchase, e.B a property or frequent purchases over a period of time. On the one hand, the seller guarantees that the described circumstances of the company are accurate and correct.
Some of the events that the seller must confirm are the following: the company belongs to the signatories and they have the power to sell the company; the transaction does not violate any prior law or other contract; the company holds such as the number of shares, approval that all financial statements are correct, all tax payments are updated, that the company has not undergone significant changes in performance since due diligence (dividend distribution, salary increases or newly signed contracts that could harm the buyer); Copies of the articles of association will be given to the Buyer; and the company`s patents and trademarks are present. .