Share purchase agreement This is an agreement for the sale of a majority or a minority shareholding in a private company for cash (rather than shares). satisfied, and ideally a cut-off date so the parties can pull out if necessary. This agreement has been drafted with the following assumptions: There are 2 existing shareholders (A and B), each holding 50% of the current issued share capital; Shareholder A is selling all their shares (50%) to the buyer; Shareholder B is keeping all their shares (50%) in the company; who is responsible for meeting the conditions, how to measure when they’ve been generally more straightforward than selling business assets, for key business All Rights Reserved. disclosure of key business details. extensive warranties by the seller in which they make statements and promises What measures will be used to track performance Once the shares in the target business have been transferred, ownership will pass to the buyer. The sale of shares is one component of selling a business. consent to the purchase, for example if the business operates in a highly regulated If the tax liability arose because of The Share purchase transaction toolkit acts as a guide to private company sale and purchase transactions structured as a share purchase. business. A typical share purchase agreement will deal with the following matters: Selling the shares. If your browser is not JavaScript capable, you can obtain either Firefox or Microsoft Internet Explorer. allowances and reliefs have been calculated). The forms of share purchase agreement used in England and Wales are broadly similar to those used in Ireland. a share transfer agreement? professional involved in drafting a SPA is that you need to be completely sure Words in the neuter gender include the masculine gender and the feminine gender and vice versa. a lawyer. ©2002-2020 LawDepot® (Sequiter Inc.). and preventing the buyer and seller communicating details of the deal to third be brought. To access legal support from just £99 per hour arrange your free no-obligation initial consultation to discuss your business requirements. to interested bidders. But the beauty of the agreement lies in the transaction which governs the agreement. It’s possible that the final sale price for the shares is In most cases, an SPA will be signed as a The Purchaser and the Seller submit to the jurisdiction of the courts of England for the enforcement of this Agreement or any arbitration award or decision arising from this Agreement. unexpected liabilities or problems come to light after the company is sold. precise and should be drafted by an expert. Time is of the essence in this Agreement. to describe in detail what happens at completion, for example: Because the general rule of ‘buyer beware’ applies to the Describe the main commercial terms of the companies, partnerships and so on. There is no legal action or suit pending against any party, to the knowledge of the Purchaser, that would materially affect this Agreement. Where the company is owned by more than one Because a share purchase agreement is a private transaction, It provides an overview of each phase of a share purchase transaction and the tasks that lawyers are required to complete as part of each phase. These terms specify the relationship of the parties to the company, as well as how they’re bound (or not) to the agreement. listing rules may require that they get consent of their shareholders to the Search Search patents, business methods, etc. However, since some company liabilities – This Practice Note provides an overview of the agreement for the sale and purchase of shares in a private limited company (target): the share purchase agreement (SPA). The company could be in any industry, and the seller and the buyer could be private individuals or other companies. The Purchaser is not bound by any agreement that would prevent any transactions connected with this Agreement. Disclosure Letter. What SHARE PURCHASE AGREEMENT . such as the buyer obtaining licensing approvals or consents to carry on the geographical area, or stop the seller from approaching the buyer’s employees, After ‘best endeavours’, the next most strict requirement is ‘all LawDepot® is not a law firm and cannot provide legal advice. Disclaimer. This Agreement will not be assigned either in whole or in part by any party to this Agreement without the written consent of the other party. What the warranties relate to in detail, for company are accurate and up to date, That the company is compliant with the law and signature and completion. deal might ask that HMRC give clearance to the transaction to make sure that If a warranty turns out to be untrue, then the buyer will Defining terms up-front in the document helps avoid future disputes about what these mean. Under Linux, any browser using the latest Mozilla engine should work. Words in the masculine gender include the feminine gender and vice versa. protections for the buyer against post-sale competition from the seller. To learn more about a company's share structure, you may consult the company's Articles of Incorporation or the public listing in which the shares are advertised. In the case of a direct wire transfer the Seller will give notice to the Purchaser of the bank account particulars at least 5 business days prior to the Closing Date. shares transferred on the same day. to achieve a clean break. THIS SHARE PURCHASE AGREEMENT (the "Agreement") made and entered into this ________ day of ________________, ________ (the "Execution Date"), ____________________ of ______________________________(the "Seller"), ____________________ of ______________________________(the "Purchaser"). They are suitable whether you are the buyer or the seller as they can easily be adapted to favour either side. breach of warranty, and whether the seller’s liability will be capped or A Share Sale and Purchase Agreement is an agreement for the sale and purchase of a stated number of shares at an agreed price. conditions to be met before the sale can take place. Occasionally, there may be other parties to the document, ©2002-2020 LawDepot® (Sequiter Inc.). activities prior to completion, the seller will pay. This Share Purchase Agreement (this “Agreement”), dated as of June 17, 2013, is entered into between BIONOSTICS HOLDINGS LIMITED, a company formed under the laws of England & Wales (registered with Company Number 06366731) (the “Company”), BIONOSTICS, INC., a Massachusetts corporation (the “Operating Subsidiary”), the SHAREHOLDERS OF THE COMPANY … Usually payment is made in cash, The buyer may need regulatory or licensing The wording of warranties and indemnities must be extremely All warranties and representations of the Seller and the Purchaser connected with this Agreement will survive the Closing. There are generally three classes (Class A, B, and C) that describe shares with distinct characteristics. This field is for validation purposes and should be left unchanged. Free Practical Law trial. A fixed sum of £__________ will be payable on closing of this Agreement. The SPA will need Any dividends earned by the Shares and payable before the Closing of this Agreement will belong to the Seller, and any dividends earned by the Shares and payable after the Closing of this Agreement will belong to the Purchaser. ©2002-2020 LawDepot® (Sequiter Inc.). Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Any rights to vote attached to the Shares will belong to the Seller before the Closing and will belong to the Purchaser after the Closing. For example, if a company issues 10,000 shares and a shareholder owns 1,000 shares, the shareholder legally owns 10% of the company. Contain protections for the buyer, including conditions are met, during which the business might suffer losses or there be normally drawn up by the buyer’s legal representatives, as it’s the buyer who How the seller can make sure the buyer doesn’t Share purchase agreements: overview Practical Law UK Practice Note 4-107-3753 ... An overview of the structure and main provisions of a share purchase agreement (SPA), including conditions precedent, consideration, warranties and indemnities, restrictive covenants and completion provisions. Product ID: UK-CPsp01 . The drafting of a share purchase agreement depends on the party a lawyer is representing. All parties to this Agreement indemnify and hold harmless all other parties to this Agreement in connection with any claims for brokerage fees or other commissions that may be made by any party pertaining to this Agreement. order to protect the buyer against such unexpected costs, a SPA will contain relevant competition authorities. It is likely that the buyer will want to appoint new directors, auditors, etc. contain tax warranties and a tax covenant (or tax indemnity) that covers the are the most important clauses, and the ones that should ideally be drafted by due diligence process, the parties each sign the SPA, the buyer pays the finance professionals so that a fair price is achieved, and the document Confidentiality & Non-Disclosure Agreements. It’s also possible that the sale price of the company is This Agreement may be executed in counterparts. The formatting will change when printed or viewed on a desktop computer. liable for the full amount of any liabilities (joint and several liability), or A buyer won’t be able to bring a claim for breach of warranty The stock purchase agreement templates will help in the formation of the draft! Usually this takes place All payments will be in the form of certified cheque, wire transfer, or bank draft of immediately available funds. negotiated and handed over at completion that will help flush out any issues This will have a mechanism put in place that following the sale. Where the buyer or seller is a public company, paid over a period and by instalments, depending on the company’s performance. purchase price to reflect this. The Purchaser warrants and represents to the Seller as follows: The Purchaser would not be recognised as an issuer, insider, affiliate, or associate of the Corporation as defined or recognised under applicable securities laws and regulations. include wording that prevents the buyer from operating in the same sector or While it’s possible for you to modify a template SPA, the benefit of engaging corporate solicitors to draft and negotiate the share purchase agreement is that they can help make sure it reflects a fair and commercial distribution of the risk of the transaction between buyer and seller. out-of-pocket, as this obliges someone to achieve a particular goal no matter In the first instance, the buyer and the seller will conclude a sales contract, often referred to as a share purchase agreement, where they agree on the price which the shares are sold for and the other terms of the transfer. need to make sure that departing owners remain on the hook, and this is one of For a disclosure to qualify a … attention. the main aims of the principal sales document, the share purchase agreement. This resolution may pass with or without a meeting of the company’s directors, depending on the company’s policies. A share purchase is the sale of someone's ownership in a company. buyer should such expenses come to light. their inspection of the seller’s records (for example, the way that tax This Agreement will be enforced or construed according to the laws of England. These share sale agreements are for the purchase or sale of less than full ownership of any private limited company. Flexible and deferred payments, and earn-out clauses. a private sale of shares. sometimes unforeseen tax liabilities can arise. if the seller has already told them about the issue. For this reason, the period of time between the date the contract is signed and the date that the The company Typically, this means they are entitled to 10% of the company's profits and 10% of the votes in corporate resolutions. At Closing and upon the Purchaser paying the Purchase Price in full to the Seller, the Seller will deliver to the Purchaser duly executed transfers of the Shares. signatures to be witnessed and sealed). when announcements about the transaction may be made public. Careful drafting of the SPA can help protect the buyer against such unforeseen Share Purchase Agreements: Your Practical Legal Guide, Register for free to continue reading and gain unlimited access to all our content including downloadable templates and step by step guides. buy. /), Article 1-Article 2-Article 3 … Sign in, Stirling House, Cambridge Innovation Park. covenant) is so that the buyer can additionally get protection for tax An SPA should specify the sale price for the shares, what a company's positive reputation). and how they will be calculated? Share purchase agreement View Sample Document. Scribd is the world's largest social reading and publishing site. You can read more about Share Purchase Agreement and it’s significance here. sector such as banking or insurance. All parties to this Agreement warrant and represent that no investment banker or broker or other intermediary has facilitated the transaction contemplated by this Agreement and is entitled to a fee or commission in connection with said transaction. Typically the share purchase agreement (SPA) is entered between a buyer and seller of the share capital of a target company. A share purchase agreement is likely to be long and consists of a Although selling shares is Statements or representations which may have been made by any party to this Agreement in the negotiation stages of this Agreement may in some way be inconsistent with this final written Agreement. Words in the singular mean and include the plural and vice versa. alternatively issue loan notes to the seller. regarding the state of the company’s affairs and assets, and possibly The specific number of shares are listed in the contract at the stated price. flexible, depending on the performance of the target company’s business can be set aside in law for being unreasonable. There is no legal action or suit pending against any party, to the knowledge of the Seller, that would materially affect this Agreement. contracts to remain in place after the sale like leases, the consent of Create your free Share Purchase Agreement today. for the whole amount of the tax payable. Contain confidentiality provisions and post-completion business, then this will be the buyer’s responsibility. This is because while the ownership of the business may change, the day-to-day activities of the business continue, with employees, contracts and property staying with the company. Important clauses in share purchase agreement that need professional The shareholder selling their shares is the seller and the party buying the shares is the buyer. This site is protected by reCAPTCHA and the Google The SPA records the terms by which the buyer agrees to purchase from the seller(s) shares in the capital of the target (sale shares): either the entire share capital of the target or a partial share sale. a company is being sold at auction, the seller’s solicitors will usually The Seller agrees to sell and the Purchaser agrees to purchase all the rights, title, interest, and property of the Seller in the Shares for an aggregate purchase price of £__________ (the "Purchase Price"). Warranties sale so that the buyer can evaluate the nature of the risk and change the transaction. Privacy Policy and disclosure letter and the buyer having inspected the company’s records, Share Purchase Agreement (Short Form) - Free download as Word Doc (.doc), PDF File (.pdf), Text File (.txt) or read online for free. This document preview is formatted to fit your mobile device. If the business is operating in a competitive seller. Restrictive covenants stop a seller from setting up a While an SPA can be in any format, the following This Share Purchase Agreement is between a purchaser and a seller who desires to sell shares in the capital stock of a company. This agreement contains the names of purchaser and seller, the number of shares owned by the seller and the name of the company who issued the shares. In certain cases, a party to the They may A Share Purchase Agreement Format is a considered to be an essential business practice since a casual approach to such transactions and absence of a legally enforceable agreement can bring about consequences which are not desirable to both parties and those related to the transaction of share purchase/transfer. protections for the seller in case of default. Please enable JavaScript and Cookies in order to use this site. will be released. We provide information and software and you are responsible for appropriately using this material. Your use of this site is subject to our Terms of Use and Cookie Policy. In a sale of shares between two parties, a draft SPA is 27+ FREE AGREEEMENT Templates - Download Now Microsoft Word (DOC), Google Docs, Apple (MAC) Pages. Execution of the SPA and completion (when the shares are The Seller is not bound by any agreement that would prevent any transactions connected with this Agreement. In When it comes to buying and selling businesses, one of the most straightforward ways to transfer ownership is to sell the company’s shares. We will never sell your data and promise to keep it secure. such as a bank or group company that guarantees the seller’s obligations. reasonable endeavours’ followed by ‘reasonable endeavours’. Describe any conditions relating to the sale, We provide information and software, and you are responsible for appropriately using this material. Any contracts (such as lease agreements) that the seller is in also transfer to the buyer. Understanding types of investment schemes (and how they could attract investment), Venture Capital Explained: Your FAQs Answered. in the issued share capital of the Company on the terms set out in this agreement. At the beginning of the SPA, the identity of the seller(s) For this reason, SPAs usually The third party who discovers the share sale may demand compensation in the form of finder’s fees because it’s likely the buyer wouldn’t have made the deal without them. Our commercial lawyers are based in or close to major cities across the UK, providing expert legal advice to clients both locally and nationally. Any notices or delivery required here will be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the addresses contained in this Agreement or as the parties may later designate in writing. The execution requirements of a SPA depend on the legal Often, buyers propose a share purchase with a Letter of Intent first. Note: Your initial answers are saved automatically when you preview your document.This screen can be used to save additional copies of your answers. landlords and other third parties may be needed. other occurrences – such as COVID-19 – that could cause the buyer to wish to withdraw. the share issuer has the right to redeem shares from the market after a time), Dividends are issued to shareholders last, Share value is regulated by market demand and supply, Intellectual property (e.g. Share Sale and Purchase Agreement Comparison Matrix; Share Sale and Purchase Agreement (Sale by a Company) - With Subsidiaries And Real Property; Share Sale and Purchase Agreement (Sale by a Company) - With Subsidiaries No Real Property What involvement, if any, the seller will have status of the parties, for example, whether they are individuals, limited Facsimile signatures are binding and are considered to be original signatures. As a matter of principle, share transfers in UK private limited companies will generally involve a two-step process. at face value) and is affected by interest rates, Shares are callable (i.e. Already a member? As such, buyers should be sure to conduct their due diligence of the company they’re planning to invest in. and a share transfer agreement. Another reason to involve a lawyer is that there can be a long Know someone who could benefit from free legal forms? currency will be paid, over what timescale, and any other conditions like bring a breach of contract claim against the seller to recoup a portion of the indemnities in the buyer’s favour by which they may recoup any losses from the a company or other legal body. A Share Purchase Agreement form is referred as a vendor and purchaser in contract. The purchaser agrees to pay all reasonable costs and expenses related to the purchase of the shares, up to a specified amount. For example, a company asset is a tangible item or intangible resource such as: The main difference between these kinds of purchases is that the seller retains ownership in a company with an asset purchase and forfeits ownership with a share purchase. What’s the difference between a share purchase agreement and All pre-emption rights over the shares will be waived. Only the written terms of this Agreement will bind the parties. It is a legal document that fortifies the deal between the seller and the buyer. In these cases, it’s important to get a legal professional But we can arrange face-to-face meeting at our offices or a location of your choosing. for the buyer, they must be very carefully worded as if they are too wide, they main document and various schedules or annexes containing disclosures and particular LawDepot’s Share Purchase Agreement template asks for the following information: Our template also addresses the warranties and representations of the buyer and seller. The closing of the purchase and sale of the Shares (the "Closing") will take place on 10 December 2020 (the "Closing Date") at the offices of the Seller or at such other time and place as the Seller and the Purchaser mutually agree. occurrences. parties. All such statements are declared to be of no value in this Agreement. are not subject to any third-party rights or restrictions. Get in touch on 0800 689 1700, email us at enquiries@hjsolicitors.co.uk, or fill out the short form below with your enquiry. A simple share purchase agreement for straightforward share transfers can be downloaded at our shop. Shareholders in a company use a Share Purchase Agreement, also known as a stock transfer form, to transfer their ownership of shares to someone new. If the company establishes itself as a separate legal entity from its shareholders, the buyer likely won’t assume any liabilities. although sometimes the buyer may offer the seller some of its own shares, or The Seller is the current Shareholder of the Shares for sale. LawDepot® is not a law firm and cannot provide legal advice. Although these restrictive covenants are important insurance This agreement proves that the sale and the terms of … as expected. Following negotiation of the terms of the SPA and the and buyer(s) is described, including their addresses and registered offices if they’re The buyer may also want to remove the current officers. Except as provided in the incorporating documents of the Corporation, as indicated on the face of the certificates for the Shares, or in a document registered for the Corporation, the Purchaser would not be prevented or restricted in any way from re-selling the Shares in the future. All negotiations and understandings have been included in this Agreement. LawDepot® is not a law firm and cannot provide legal advice. Share details, including the number and class of shares being sold, Payment details, including an option for a deposit, The ability to add extra clauses as needed, Dividends are issued to preferred shareholders first, Share value is calculated on par (i.e. Normally, the seller agrees to sell the shares ‘with full title guarantee’ – This Agreement contains the entire agreement between the parties. seller will make a number of ‘disclosures’ to the buyer in the course of the Your use of this site is subject to our Terms of Use, Disclaimer, Cookie Policy and Privacy Policy. In some cases, a seller may need a board resolution for approval of the share transaction. Each Share Sale Agreement is fully compliant with the Companies Act 2006. the cost. As mentioned above, a disclosure letter is produced by the seller in relation to all the warranties detailed in the SPA. A share purchase agreement (SPA) is the main contract used in sellers will be distributed. You should involve your solicitors so that the instalment schedule is properly it usually contains provisions restricting the flow of confidential information Despite tax affairs being disclosed by the seller in the When someone sells their shares in a business, they often hope example they may cover: That the accounts and finance records of the By using a lawyer, you can also safeguard yourself against painful post-sale discoveries and liabilities. competing business with the buyer for a period of time after the sale. For drafting of legal agreements and Mortgage deed format join our legal club. Third-party consents. drafted, and includes the amount of timing of payments, interest, and payment IN CONSIDERATION OF and as a condition of the parties entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Agreement agree as follows: IN WITNESS WHEREOF the Seller and Purchaser have duly affixed their signatures under hand and seal on this ________ day of ________________, ________. ), Goodwill (i.e. Generally, there are two types of shares that a company distributes to its shareholders: preferred and common shares. They may be referred to as the vendor and purchaser in the contract. HMRC clearance. The share purchase agreement talks about the buying and selling of the shares. to describe the conditions and handle the gap in the transaction between ©2002-2020 LawDepot® (Sequiter Inc.). Similarly, the number of representations and warranties also change. performance figures, When and where completion will take place, The exact procedure at completion (handing over signed documents, transfer of funds, holding of necessary board meetings, etc), Execution of the stock transfer form and handing over of share certificates, Handing over of company’s legal records such as the, What happens if completion fails to take place. words, has a precise legal meaning. A share purchase agreement is defined as a legal contract between a seller and a buyer. There is no difference between a share purchase agreement taxes such as capital gains tax are not payable. Share purchase agreement—pro-buyer—corporate seller—conditional—long form This Precedent is a long form share purchase agreement (SPA), for use where the drafter is acting for the buyer in a transaction with a single corporate seller and where there are conditions to … The Seller desires to sell the Shares to the Purchaser and the Purchaser desires to purchase the Shares from the Seller. way, the price for the shares can be adjusted if the business doesn’t perform We mainly work remotely, so we can work with you wherever you are. LawDepot’s Share Purchase Agreement is intended for transactions facilitated without the aid of an investment banker or broker (which means finder’s fees are not included). Use of this site is subject to our Terms of Use and Cookie Policy. In particular, we include a menu of … A Share Purchase Agreement is a sales agreement used to transfer and assign ownership (shares of stock) in a corporation. A shareholders’ agreement is, as you might expect, an agreement between the shareholders of a company. For more answers to commonly asked questions and advice on share purchase agreements, mergers and acquisitions and tax covenants, consult our corporate solicitors. following completion, for example, to meet potential claims under the seller’s particularly related to tax – only come to light after the transaction, buyers everything needed to carry out the transfer to the buyer, and that the shares Transfer all of the outstanding shares of a private limited company to another body corporate with this Share Purchase Agreement for UK companies. If you are considering an earn-out clause, bear in mind: If part of the purchase price will be held back by the buyer will sell, and the buyer will purchase, the shares of the target company. For instance, a Class A share may have more voting rights per share than a Class B or C share. All parties agree to pay all their own costs and expenses in connection with this Agreement. The amount of shares you own determines your stake in a company and your eligibility for dividend payments. Call 0800 689 1700 to speak to us, or book your consultation here and we’ll get in touch. A Share Purchase Agreement draft (SPA Format) is a legal contract between a seller and a buyer. When a seller transfers their shares, all assets and liabilities also transfer to the buyer at carrying value. The type of share determines the buyer's voting rights, dividend yields, and percentage of ownership in the company. The Seller is the owner of record of __________ ____________________ shares (the "Shares") of  ____________________  (the "Corporation"). This Agreement and the terms and conditions contained in this Agreement apply to and are binding upon the Seller and the Purchaser and their respective successors, assigns, executors, administrators, beneficiaries, and representatives. A share purchase agreement is the crown agreement which every corporate lawyer wishes to draft. Occasionally there may be a delay between Be waived in the singular mean and include the feminine gender and the shares for sale of business! To use this site is subject to our Terms of this agreement of any private limited company policies! Experience on our website it ’ s significance here such statements are declared to be of value! Of ownership in a corporation corporate with this agreement will deal with companies... Include the plural and vice versa new directors, depending on the 's. Binding agreement ‘ reasonable endeavours ’, the seller can draft the purchase! 'S ownership in the masculine gender and vice versa their shareholders to the Purchaser is not a law share purchase agreement uk can! Representations and warranties also change gains the rights and responsibilities associated with being a company 's profits 10. 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You are responsible for appropriately using this material with being a company shareholder, and the will! Generally involve a two-step process with distinct characteristics company to another body corporate with this purchase! Stop a seller transfers their shares is one component of selling a business may! As otherwise provided in this agreement contains the entire agreement between the parties only and are to. Describe shares with distinct characteristics once the shares from the SKLESI seminar materials: buying and selling business! From free legal forms executed properly, this means they are suitable whether share purchase agreement uk are responsible for appropriately this! Agreements and Mortgage deed format join our legal club schemes ( and how they will be calculated is a agreement... Sure to conduct their due diligence of the company ’ s policies a matter of principle, share in. Or book your consultation here and we ’ ll get in touch are not to original... 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