A share purchase agreement (“SPA”) is a contract between a buyer and the seller(s) of a target company’s stock in which the seller(s) agrees to sell a certain number of shares to the buyer at a certain price. The SPA is used to document mutual written agreement on the terms and conditions of selling some or all of a target company’s shares. Assume that a target company includes its subsidiaries for this article. SPAs are common in mergers and acquisitions (“M&”), and they occur when an investor buys a company in its entirety or part.
10+ Share Purchase Agreement Samples
The stock purchase agreement is a contract in which all terms and conditions pertaining to the sale and purchase of the company’s shares are finalized. This is not the same as an asset purchase agreement, which involves the purchase and sale of assets rather than stock.
1. Share Purchase Agreement Deemed Dividend
2. Share Purchase Agreement Sample
3. Share Sale and Purchase Agreement
4. Printable Share Purchase Agreement
5. Share Sale and Purchase Agreement Sample
6. Formal Share Purchase Agreement
7. Share Purchase Agreement Format
8. Professional Share Purchase Agreement
9. General Share Purchase Agreement
10. Editable Share Purchase Agreement
11. Standard Share Purchase Agreement
Transferring Shares In a Company
Before agreeing to purchase shares in a private company, a prospective buyer will typically seek a professional valuation and draft a detailed purchase contract. This knowledge will help you understand the general process of closing a stock sale and what the buyer and seller should expect at each stage.
In general, share transfers in private limited companies in the United Kingdom will be a two-step process. In the first instance, the buyer and seller will enter into a sales contract, also known as a share purchase agreement, in which they will agree on the price for which the shares will be sold as well as other transfer terms.
The transfer of the share is the second step (s). The buyer becomes the owner of the shares that were part of the sale transaction at the end of the second step. “Settlement” is a term used to describe the second step.
It’s worth noting that, unless otherwise stated, the term ‘transfer’ in the company’s articles of association only refers to the transfer of legal title to the shares, not an equitable interest. This could have significant ramifications in terms of share transfer restrictions.
Items Listed in Stock Purchase Agreement
- The name of the business.
- Shares have a par value.
- Purchaser’s name.
- The seller and the buyer both make warranties and representations.
- Benefits and bonuses may be an issue for employees.
- What is the total number of shares being sold?
- When and where the transaction occurs.
- Unforeseen costs are covered by an indemnification agreement.
Before the agreement is finalized, a letter of intent is written to explain the proposed sale. A buyer must conduct due diligence and ensure that the terms of the purchase agreement and the letter of intent are identical. The sale and purchase section, as well as the warranties and representations section, should be scrutinized by the seller. The terms in the sale and purchase section should be identical to those in the letter of intent. If any discrepancies are discovered, they are most likely the result of buyer due diligence and must be resolved before the share purchase agreement is finalized.
The warranties and responsibilities must be double-checked to ensure that no statements are false. If this occurs and is discovered later, legal action and recourse may be available. If the seller makes any misrepresentations, the buyer may be entitled to a purchase price adjustment after the transaction.
What are the restrictions when transferring shares?
A shareholder has the legal right to transfer his or her shares whenever and to whomever he wants. However, provisions in the articles may significantly limit this freedom. Pre-emption clauses, which require a member to first offer his shares to other specified persons, such as the directors or other members, are two common types of restrictions found in the articles of private companies: (a) provisions that the board of directors should have the power, general or limited in scope, to refuse to register transfers as they see fit; and (b) provisions that require a member to first offer his shares to other specified persons, such as the directors or other members.
Who needs a Share Purchase Agreement?
A share purchase agreement should be used when a corporation or individual is buying or selling shares in a company with another corporation or individual. For example, if a business has two equal-share partners and one of them leaves, a share purchase agreement can be used to buy their shares in the company. Instead of purchasing all of the shares, the purchase of a business agreement can be used.
If you want to see more samples and formats, check out some share purchase agreement samples and templates provided in the article for your reference.
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