share-purchase-agreement

SHARE PURCHASE AGREEMENT

The Share Purchase agreement protects all the parties involved to guard their concerns well ahead of the transfer of shares takes place.

PROCESS FOR SHARE PURCHASE AGREEMENT

  • The person preparing the share purchase agreement has to format the document for the share purchase agreement process.
  • On the top of the page one has to insert the proper title for the share purchase agreement
  • Details of the purchaser and seller are added at the start of the agreement
  • The accurate legal description of the property must be included in the agreement

THE PURCHASE PRICE AND PAYMENT

  • The purchase price has to be mentioned
  • One has to identify if any earnest money has been deposited
  • The method of financing has to be described
  • The list of items that are included in the sale
  • The items that are not listed in the sale have to be identified

DESCRIBING CLOSING COST

  • The closing cost the seller will pay has to be mentioned
  • The closing cost the buyer will pay has to be stated
  • It has to be mentioned who will pay the taxes

DESCRIBING THE INSPECTION PROCESS

  • The buyer has to be inspected to secure an inspection
  • It must mention whether the sale is dependent on an inquiry
  • One must identify the options if the inspection turns out to be unsatisfactory
  • It has to be recommended that the purchaser must secure a survey

MAKING PROMISES ABOUT THE PROPERTY

  • The seller’s representation has to be listed
  • The deed conveyed has to be described
  • A description of the “risk of loss” passes has to be stated

FINALIZING THE AGREEMENT

  • This must include a dispute resolution cost
  • It must confirm the time of acceptance and closing
  • It must add the acceptance by the seller
  • One should show their draft agreement to an attorney from ACE ALLIANCE for better guidance

BENEFITS OF THE SHARE PURCHASE AGREEMENT

  • The share purchase agreement (SPA) is done during the process of onboarding a shareholder. The lack of a share purchase agreement can lead to unnecessary issues in the business, so it always advisable to get a share purchase agreement made
  • A share purchase contract ensures the concerned parties are given an opportunity to protect their interests, ahead of the transfer of shares. It preserves all the aspects of the business. The SPA is important for all the concerned parties to study and analyse every provision in the agreement. This helps them clearly understand the meaning of it
  • The SPA helps to formalize and execute the sale of shares in an organized and legal manner
  • Since a SPA is extremely detailed and cover all the areas involved in the transaction, there is little to no scope for any kind of confusion
  • The SPA helps to build a legal structure which protect the benefits of sellers, if they are cheated
  • The SPA helps the authorities to keep a track of such transactions. This helps the authorities in enforcing them.
  • The SPA helps companies keep a track of their shareholders. This helps to include the shareholders in their decision-making process

REQUIREMENTS OF A SHARE PURCHASE AGREEMENT

  • The recitals must be included in the agreement. This sets the primary context of the agreement
  • The SPA should mention the complete and correct details of the parties
  • The SPA must include the number of shares involved in the transaction. It should also include all the other details of the shares
  • The purchase price of the shares is taken to be fair to both parties
  • There must be a mutual agreement on the mode of payment of the purchase price
  • The closing mechanism in regards to the city/date/time and the time period in which these  procedures have to concluded
  • The warranties and representation of the buyer and seller. The warranty is a contractual statement given by the seller to deliver all the details of the shares to the buyer
  • Any false or inaccurate information provided by either parties may result in a court case. Thus, it’s very important that proper attention is paid to every detail while preparing the SPA
  • The statement of severability and binding effect of the agreement to the deal

WHO NEEDS A SHARE PURCHASE AGREEMENT?
Any individual who purchases or sells shares in a company/industry with another business/individual must use a share purchase agreement. For example, if there are two partners in a business, they have equal rights and shares. If one of them plans to leave the  partnership, a share purchase agreement will be used to buy his or her share in the business. When all the shares are acquired, the purchase of a business agreement can be utilized instead as well.

SHARE PURCHASE AGREEMENT DRAFT
The share purchase agreement is usually drafted by the buyer, although it is quite common for a seller to produce the first draft on an auction sale.

INFORMATION TO BE INCLUDED IN THE SHARE PURCHASE AGREEMENT

  • The buyer of the shares
  • The seller of the shares
  • The company whose shares are being sold
  • The value of the shares being sold
  • The law that governs the share purchase agreement
  • The type of shares that are being sold
  • The agreement has all the payment details including the deposits made
  • The details about when the complete payment is due and the end date of the SPA
  • There are two types of classes in regard to shares. The important aspect is voting and non-voting shares. The voting shareholder can voice their opinion on the board of director’s choices and on corporate business strategy. The non-voting shareholder is not allowed to vote on board of directors changes/or corporate policies

PROCEDURE FOR A SHARE PURCHASE AGREEMENT

You can have contact from a well efficient lawyer and explain the total process and make them understand the need to share purchase agreement with you. Once the objection of the same is clear, the lawyer shall draft the purchase agreement accordingly. The draft share purchase agreement will be sent to you for your review. Finally, the whole process takes around 3-4 working days.

DOCUMENTS REQUIRED FOR A SHARE PURCHASE AGREEMENT

  • After the sale of shares is completed, the seller hands the buyer a signed share transfer form. This form states that the shares are being transferred and that payment has been received
  • The company needs to cancel the seller’s existing share certificate. It will issue new share certificates to the new shareholders
  • When the seller resigns from the company, he or she must hand over the resignation letter prior to or on completion of the sale.
  • Once a share sale has been effected, it is mandatory for the said company to notify the ASIC (application-specific integrated circuit) within 28 days of the change. This can be done by Form 484, which is available on the ASIC website

Once you get in touch with us at ACE ALLIANCE with your request to create an share purchase agreement, we will start the process. After our team receives all the details, our expert team of lawyers will create the share purchase agreement sample and send it across for your reference within 2- 3 business days. The price you pay for these services will includes three rounds of iterations. Therefore, if you need any changes done to the share purchase agreement, our team of lawyers at ACE ALLIANCE will do the needful.